HR 4.0

Avoiding additional tax on claimed home working facilities

September 13, 2021 - 3 minutes reading time
Article by Marcel De Dood

In this Payroll Case we explain how to deal with claimed expenses for home working facilities when an employee leaves the company in the Netherlands. Doesn't it become ‘wages in kind’, which are taxable once the provisions are no longer used? A hot topic, now that home workers have set up their home environment as their primary workplace. Main character in this case, Annabel, also did this.

Annabel has been working from home since March 2020. Truly extraordinary how a news report about a virus in China suddenly gets so much impact, when Prime Minister Rutte, Minister de Jonge and sign language interpreter Irma advise the Dutch to work from home if they can. Annabel did have an extra room where she would occasionally work from home. Because she lives near the office, she rarely used it. How that has changed.

Slowly, her home office became more professional. Once she brought a laptop stand and a monitor from the office. When it looked like working from home would become the norm, even after corona passed, Annabel bought a sit-stand desk and an office chair. Fortunately, she was allowed to claim these items!

Three weeks ago, Annabel received a call from a former colleague. They were looking for a Marketing Manager at his company. It can't hurt to talk, right? It turned out to be a wonderful challenge that she really couldn't refuse. Last Friday, Annabel quit her current job. With pain in her heart, because she will miss her wonderful colleagues.

How to handle claimed expenses after quitting a job

Annabel does have a problem with the declaration. Should she discuss this with her current employer? Of course, it was not the intention that her claim of 968 euros would only be used for four months. She decides to bring it up; you always come across each other again, after all!

Thus, the question from Annabel's employer ends up at the desk of payroll administrator Tim, "How should we handle the claim? Is it now wages in kind and should that still be taxed? Or should we include part of it in the final settlement?"

Tim looks up the regulations and finds this information:

If the sit-stand desk has been reimbursed, directly arising from the employer's occupational health and safety policy, then the statement falls under an occupational health and safety provision within the work-related costs scheme. If the sit-stand desk is not to be considered a health & safety provision under the work-related costs scheme, then another targeted exemption applies to the expense claim, namely the ‘necessity criterion’.

In both cases, the declaration of the sit-stand desk remains untaxed for Annabel and the employer. Only, now that Annabel has left her employment, there is a difference in the processing: for the necessity criterion under the work-related costs scheme, it applies that if the provision is no longer necessary for the employment, the employee must return it to the employer or pay the residual value of the provision. If this does not happen, the provision or its residual value constitutes salary in kind for Annabel, on which she must pay wage tax in the final settlement.

It seems logical that Annabel should pay back the residual value of the desk to her old employer or that the employer should withhold payroll tax on this. However, the Dutch Tax Authorities (Belastingdienst) manual on payroll taxes says nothing about this. Tim puts the question to the Dutch Tax Authorities. Maybe they hadn't thought about it yet either.

Since Annabel can't wait this, Tim suggests not taking a risk and deducting the residual value from the final settlement. Tim has previously used the depreciation list of the insurer ABN AMRO, but he cannot explain to Annabel why an office chair is depreciated over ten years and a desk over just five years. Five years is the commonly used period, as the Dutch tax inspector will understand during an audit. Tim determines that he will deduct € 903.47 from this statement in the final settlement.

Annabel understands this. She will consider trying to recoup the expenses from her new employer.

Lesson learned

Prevent discussions afterwards and include in the policy that the residual value of reimbursed business assets is deducted in the final settlement when the employment ends. By doing this, you avoid the risk of a tax reclaim at the tax audit.

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