Electronic devices under the work-related cost scheme

Covid-19 has the whole world in its grip for quite some time now. The Dutch government therefore urgently recommends working from home. It is reasonable to assume that employees must be provided with the necessary material to be able to work from home. For that reason, many employers reimburse the costs of a computer, tablet or mobile phone to their employees. However, it is very important that the tax rules are followed, so that the reimbursement remains untaxed. If these rules are not followed, the employer could face an 80% tax charge!

What do those tax rules entail?

The work-related costs scheme means that the employer can use a percentage of his total taxable wages, the free space, to pay untaxed allowances to employees. Reimbursements for computers, tablets and mobile phones can therefore be done tax-free by means of the work-related costs scheme. Since the free space is limited, this is not an infinite solution. Fortunately, not all reimbursements are deducted from the free space.

Necessity criterion

The so called targeted exemptions are deducted from the free space, as long as the conditions are met. Reimbursements for computers, tablets or mobile phones are specifically exempted if the necessity criterion is met. This criterion entails that the equipment is necessary for the proper performance of the employment relationship. In addition, the employer may not charge the costs of the equipment to the employee and the employee has to return the equipment at the end of the employment.

Business criterion

It is quite conceivable that the fairly strict necessity criterion is not always met. Fortunately, computers, tablets or mobile phones are also specifically exempted if the business criterion is met. This means that the computer, tablet or mobile phone can be reimbursed tax-free if the equipment is used for 90% or more for business purposes.

So, if the necessity or business criterion is met, computers, tablets and mobile phones are specifically exempted. If these conditions are not met, the compensation will be deducted from the free space and no tax will be levied on the reimbursement either. However, it is very important to ensure that the free space is not exceeded. After all, the employer has to pay 80% tax on allowances that exceed the free space!

It is certain that the tax rules must be followed properly. Are you unsure whether a certain reimbursement can be reimbursed tax-free? Do not hesitate to contact us!

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