Tax-free rewards with the WKR

Christmas package, bicycle plan, telephone subscription. The Work-related cost scheme (werkkostenregeling, WKR) allows you to give gifts, company parties and allowances to your employees without paying tax on them. Learn more about the rules and the possibilities for your business.

The WKR allows you to use a percentage of the gross salary of all your employees together to give untaxed allowances to your employees. This saves you and your staff money. Most businesses have laid down these agreements under the heading 'fringe benefits' in contracts and they are also included in collective labour agreements (CAOs).

In some cases, businesses give their employees the choice of what to spend a certain amount of money on. For example, one colleague likes to be reimbursed for a bicycle for commuting, while another prefers to buy a gym membership tax-free.

The percentage over the total taxable wage you can use for such allowances is called the discretionary scope (vrije ruimte). In 2024, you may use 1.92% over the first €400,000 of the wage total (so, a maximum of € 7,680). Above €400,000, it is 1.18%. Some exemptions, such as travel allowances, do not affect the discretionary scope.

Chances are you will make employees happier with money than with a staff party

Discretionary scope

Suppose you have 4 employees. Your business' wage total is €182,400. Then you can jointly give them just over €3,500 in tax-free allowances. By the way, you do not have to give each colleague exactly the same amount. The Netherlands Tax Administration accepts a maximum allowance of € 2,400 per employee.

The advantage is that you and your staff do not pay tax on that allowance. Also, your employees' pay does not go up because of the allowance. This is beneficial for employees who are entitled to income-related contributions, such as child budget, rent, care or childcare allowance.

80% tax

If you exceed the amount of the discretionary scope by giving allowances, you pay 80% tax on this. You pay that, not your employee.

"That 80% sounds hefty," says KVK adviser Gé Sletterink. "But it can sometimes still be more advantageous than paying out the money as salary. Especially if your employee is in the high-income tax bracket."

Extra money

You can use the WKR not only for staff parties, gifts or allowances. You can also transfer an extra amount of money to your employees.

Sletterink: "In economically difficult years, you can specifically do this. Chances are that at those times you make employees happier with a sum of money than with a staff party."

Targeted exemptions

Some untaxed allowances you arrange through the WKR do not affect the discretionary scope. So you can give these without limit, as long as you meet certain conditions. There is no maximum amount for specific exemptions (gerichte vrijstellingen).

Specific exemptions include for example, allowances for travel expenses (up to 23 cents per kilometre), subscription costs, meals for overtime, and applying for a certificate of good conduct (VOG). Your employees can also make untaxed use of company equipment, such as a laptop or mobile phone. Even if they use the work equipment privately, you do not have to pay tax on it.


If you apply the specific exemptions, you must take into account the necessity criterion. This means that the allowance or provision is necessary for the work your employee does.

This applies, for example, if you reimburse your employee's internet costs or provide a laptop. A mobile phone is necessary for an employee who often makes calls on the road. If the Tax Administration can prove that the use of that mobile phone is not necessary, you still have to pay tax on it. Or you reimburse the phone untaxed from the free space of the WKR.

Other possibilities

The WKR is not the only way to give your employees extras. That is why KVK adviser Sletterink recommends looking at other possibilities. For instance, a (temporary) pay rise, giving employees more hours or using a budget coach.