The Netherlands’ work-related cost scheme – a novel framework for allowances and benefits

In recent years, providing payroll services in The Netherlands, we have seen more interest internationally in offering employees a wider range of benefits, which go beyond classic elements such as salary, bonus, company car etc. 

One country that has adopted a specific framework to accommodate this trend is The Netherlands. The work-related cost scheme (WKR – Werkkostenregeling) was introduced in 2015. 

Below we provide a high-level overview of WKR. 

What is WKR? 

WKR enables employees to receive allowances, benefits-in-kind, and (temporary) provisions tax-free. There is a lot of flexibility in terms of what can be provided in addition to salaries and bonuses, including Christmas and birthday gifts, gym membership, car parking fees, travel related expenses above the standard allowances, low interest loans, a company bicycle, contributions to home working, and staff parties and trips. 

Of course, there is a financial limit to what employers can provide employees tax free. This is the “discretionary scope” (or “free space”). 

Discretionary scope 

This is the amount that can be used by an employer for allowances and benefits to employees without incurring a tax liability. The discretionary margin per employer was 1.7% of the first €400,000 of the total taxable salary bill (which basically includes everything an employee receives from their employer unless it is specifically exempt) in 2022, rising to 1.92% in 2023; and 1.18% on amounts above €400,000. 

Should the discretionary margin be exceeded, the employer must pay a levy of 80% of the excess. 


Some allowances and benefits are exempt, meaning they can be provided tax free without any bearing on the discretionary scope. These include business related travel expenses; business related meals; mobile phones; computers that remain at the place of work; training courses and seminars; work related clothing; workplace drinks. 

More detail on WKR rules and exemptions can be found on the official site for businesses:

 Do you want more information or are needing support with employment and payroll in The Netherlands? 

WKR naturally involves administration with implications for payroll – whether it be recording allowances and benefits within the permitted discretionary scope at business level or including allowances and benefits not assigned to the discretionary scope to individual employees. 

Internago can assist with full payroll services in The Netherlands as well as other European markets. Please click here to find more information, or if you prefer contact us directly at or 


Please note that this blog post only gives an overview and provides some introductory examples to payroll in the Netherlands. In practice, there are more detailed aspects to consider, which is why this blog post should only be seen as a general introduction. For a more in-depth discussion, do not hesitate to contact us at

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