To provide an employee tax-free benefits or allowances in the free space (“vrije ruimte”) of the work-related expenses scheme, those need to be designated as such in the Dutch payroll. Consequently, employees of employers who are not withholding agents for Dutch wage tax typically do not have the opportunity to benefit from this.
However, the Dutch Supreme Court recently confirmed that an employee of an employer who is not a withholding agent for Dutch wage tax, may nevertheless utilise an exemption up to a maximum of 1.7%* of the wages received from the employer for the benefits or allowances provided to him, without designation in the payroll being required. This is applied through the recalculation of the taxable wage in the Dutch personal income tax return.
Curious whether you can make use of this? Please, do contact us.
*Percentage for 2022: 1.7% of the wages up to € 400,000, 1.18% over the excess.