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The Work-Related Costs Scheme (Werkkostenregeling, WCS) is a scheme that allows employers to provide employees with work-related allowances or benefits. The implementation of this scheme is mandatory for every employer with a Dutch payroll administration. Whether these allowances or benefits can be granted taxed or untaxed depends on several factors. In our whitepaper, we explain everything you need to know.
According to Dutch tax laws, everything an employer provides to an employee is considered part of their taxed wages. With the WCS, the employer can provide employees with untaxed allowances or benefits.
In order to do this, the employer must designate these costs as final levy components. This means that these costs are removed from the individually taxed wages of an employee and allocated to the correct category within the WCS. Costs can either fall under a specific exemption, are intermediary, are valued at zero, or can be allocated to the discretionary scope.
The discretionary scope (‘’vrije ruimte’’ in Dutch) is the margin used to grant untaxed allowances and to provide benefits of all kinds to employees. The total of which amounts to a maximum of 1,92 percent of the first 400.000 and 1.18 percent over the excess of the total taxable wage bill in 2024.
How to implement the Work-related costs scheme?
Do you want to analyze the possibilities of the WCS? In our whitepaper we describe in detail how this can be done, through 4 steps:
