Introduction

The Tax Authorities regularly carry out checks on the work costs scheme (WKR) and often discover errors. This can lead to additional assessments and fines. For many companies, the WKR is an afterthought, and the HR, payroll and finance triangle often blame each other for not tackling this process. There is often no clear owner of this process. Our advice is that the Finance department takes care of the coordination and that the payroll administration manages this from the payroll system. Finance reports the total to HR, who, together with the board and/or management, presents options to make optimal use of the fiscal space. This can contribute to good employment practices and help avoid the risk of having to pay an additional final tax.

We understand that managing the WKR can be a complex and time-consuming task for your company. That is why we offer extensive services to support you in setting up and managing an effective WKR process. Our approach ensures that all stakeholders are involved and that the division of tasks is clear, so that you can make optimal use of the available space and comply with the Tax Authorities' regulations.

Our approach

1. Stakeholder involvement

- We identify and involve all relevant stakeholders, such as HR, Finance, management, and external advisors. You could make a plan internally and our advice is to always have a tax specialist review this.

- We organize monthly or quarterly meetings to discuss progress and make decisions.

2. Clear division of tasks

- HR: Keeping track of reimbursements and benefits in kind to employees.

- Finance: Financial administration and control of the free space.

- Board/management: Strategic decisions about the use of free space.

- External advisors: Expertise and advice on tax optimization and regulatory compliance.

3. Advice and optimization

- We advise you on the best ways to use the free space, such as staff outings, Christmas packages, or company fitness.

- We discuss how the free space can contribute to your business goals, such as employee satisfaction and retention.

4. Risk management and controls

- We inform you about the risks of the WKR and ensure that your administration is in order to pass inspections by the Tax Authorities.

- We prevent common errors, such as incorrect classification of reimbursements and incomplete administration.

5. Periodic evaluation and reporting

- We carry out periodic evaluations to monitor the effectiveness of the WKR and compliance with the rules.

- You will receive reports with recommendations and findings.

Example of costs if the free space is exceeded

Suppose your company has a payroll of €1,000,000. The free space is then 2% of the first €400,000 (€8,000) and 1.18% of the remaining €600,000 (€7,080), giving a total free space of €15,080. If you spend $20,000, you will exceed the free space by $4,920. The final levy of 80% on this excess then amounts to €3,936. The tax authorities can officially calculate this over the past five years, which can result in an additional assessment with a fine. The penalty can vary, but a typical percentage is 25% of the tax owed. Stel dat dezelfde overschrijding elk jaar plaatsvindt, dan kan de totale naheffing oplopen tot €19.680 aan eindheffing en een boete van €4.920. The total amount to be paid is then €24,600.

Common mistakes

- Incorrect classification of reimbursements: Reimbursements are often incorrectly classified as targeted exemptions or as part of the free space.

- Non-payment of final levy: If the free space is exceeded, the final levy of 80% is not paid or is paid too late.

- Incomplete administration: Incomplete or incomplete administration can lead to problems during an audit.

Correction time and plan of action

When a company discovers an error in the WKR administration, it must act quickly to prevent further problems. If the tax authorities carry out an audit and discover errors, this can lead to an additional tax assessment and fines. Correcting the administration and drawing up an action plan can take an average of several weeks to months, depending on the complexity and extent of the errors. This process can cause a lot of noise and stress within the company and between different departments, especially if there is no internal expertise available.

Tilstra Services can guide and maintain this process through periodic consultations per calendar year.

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