Werkkostenregeling (Work Costs Scheme)

Key Takeaways

The Werkkostenregeling (WKR) is the Dutch system that governs how employers can provide tax-free benefits, reimbursements, and perks to employees.
Employers have a free space (vrije ruimte) of 1.92% of the total wage bill (up to €400,000) plus 1.18% above that — anything within this budget is tax-free for employees.
Some benefits are specifically exempt (gerichte vrijstellingen) and do not count toward the free space — like travel allowances and training costs.
Benefits that exceed the free space are taxed at 80% — paid by the employer, not the employee.
As an employee, the WKR mostly works in your favor — you receive benefits tax-free while your employer manages the limits.

What Is the Werkkostenregeling?

The WKR (Work Costs Scheme) has been the standard system for employer-provided benefits since 2015. It replaced the older system of individual benefit rules with a simpler, unified framework.

The core idea: employers can spend a certain percentage of their total wage bill on tax-free benefits for employees. Within this budget — the vrije ruimte (free space) — benefits are not taxed as salary.

This matters because without the WKR, any benefit your employer provides would be added to your taxable salary. The WKR creates a legal way to receive perks tax-free.

The Free Space (Vrije Ruimte)

The free space is calculated as a percentage of the employer's total fiscal wage bill (column 14 of the payroll tax return):

Wage Bill Portion	Free Space Percentage (2026)
First €400,000	1.92%
Above €400,000	1.18%

Example — Company with a €2,000,000 wage bill:

Free space: (€400,000 × 1.92%) + (€1,600,000 × 1.18%) = €7,680 + €18,880 = €26,560
The employer can provide up to €26,560 in WKR benefits tax-free across all employees

Good to know

The free space is a company-wide budget, not a per-employee limit. An employer can choose to give one employee a €1,000 Christmas gift and another employee nothing — as long as the total stays within the free space. In practice, most employers apply benefits evenly.

Three Categories of Benefits

Under the WKR, every employer-provided benefit falls into one of three categories:

1. Targeted Exemptions (Gerichte Vrijstellingen)

These benefits are specifically exempt by law and do not count toward the free space. They are unlimited (within reason):

Benefit	Maximum	Notes
Travel allowance (reiskostenvergoeding)	€0.23 per km	For commuting and business travel
Public transport pass/subscription	Actual cost	Must be used for commuting or business
Work-from-home allowance	€2.35 per day	Cannot be combined with travel allowance for the same day
Training and education	Actual cost	Must be job-related
Study costs and student loans	Actual cost	For work-related education
Extraterritorial costs (30% ruling)	30% of salary (or actual costs)	For qualifying incoming employees
Meals during overtime	Reasonable amount	When you work beyond normal hours
Tools and equipment for work	Actual cost	Laptop, phone, desk, etc. (if primarily for work)
Relocation costs	Actual cost	Moving to the Netherlands for work
Moving expenses	Up to €7,750	For work-related relocation

Tip

The travel allowance of €0.23/km is tax-free regardless of how you commute — by car, bicycle, or even walking. Your employer is not required to pay it, but many do. If you commute 30 km one way for 214 working days, the annual tax-free allowance is 30 × 2 × 214 × €0.23 = €2,953.

2. Nil Valuations (Nihilwaarderingen)

These are benefits valued at €0 for WKR purposes — they do not count toward the free space either:

Benefit	Condition
Coffee, tea, water at the office	Provided on company premises
Workplace facilities	Desk, chair, computer at the office
Uniforms and work clothing	With company logo or required for the job
Company phone	If also used for work purposes
Arbo (health & safety) provisions	Annual health check, ergonomic assessment
Parking at the workplace	On company premises

3. Discretionary Benefits (Overige Vergoedingen)

Everything else falls into the free space. Common examples:

Benefit	Typical Value
Christmas gift / holiday gift	€25–100
Birthday gift	€25–50
Company party / team events	€50–200 per person
Gym membership	€20–80/month
Meals at the office (non-overtime)	€3.55 per meal (2026 norm amount)
Internet allowance	€40–50/month
Bicycle plan	Up to €2,000

These benefits are tax-free as long as the employer's total discretionary benefits stay within the free space. If the employer exceeds the free space, the excess is taxed at 80% — but the tax is paid by the employer, not by you.

How the WKR Affects Your Payslip

In most cases, WKR benefits either:

Do not appear on your payslip at all (e.g., office coffee, company laptop)
Appear as a separate tax-free line (e.g., travel allowance, WFH allowance)
Are included as part of a separate payment (e.g., Christmas bonus)

The critical thing for employees: WKR benefits are not added to your taxable salary. They do not increase your loonheffing. If your employer provides a €50/month gym membership through the WKR, you receive the full €50 benefit without paying tax on it.

Warning

If your employer provides a benefit that exceeds the targeted exemption limit or that does not qualify under the WKR, it may be added to your taxable salary instead. For example, if your employer gives you a €200 gift and classifies it as salary rather than WKR, you will see it in your gross pay and pay tax on it. Check with your HR department if something seems off.

The Work-From-Home Allowance

Since the pandemic, the thuiswerkvergoeding (work-from-home allowance) has become a standard WKR benefit:

€2.35 per day worked from home (2026)
Tax-free under the targeted exemption — does not count toward the free space
Cannot be combined with the travel allowance for the same day — your employer must choose one per day
Many employers pay a fixed monthly amount based on your typical WFH pattern

Example — You work from home 2 days per week:

Monthly allowance: 2 days × 4.33 weeks × €2.35 = €20.35/month tax-free
Annual: ~€244

This is modest, but it is entirely tax-free — every cent goes directly to you.

Practical Examples for Employees

What to Ask Your Employer

If your employer does not already provide these common WKR benefits, it may be worth raising them — they cost the employer less than equivalent salary increases because they are tax-free:

Travel allowance — €0.23/km is the maximum tax-free amount, but many employers pay less or nothing. Ask for the full amount.
Work-from-home allowance — €2.35/day. Simple to administer, fully tax-free.
Training budget — Job-related training is a targeted exemption with no limit. Your employer can pay for courses, certifications, and conferences tax-free.
Bicycle plan — Your employer can provide a bicycle through the WKR (up to the free space). Some employers offer a lease arrangement.
Internet reimbursement — If you work from home, your employer can reimburse your internet costs through the free space.

What You Cannot Get Tax-Free

Some things cannot go through the WKR:

Cash salary — the WKR is for non-cash benefits and specific reimbursements
Private expenses unrelated to work
Benefits that are "disguised salary" — the Belastingdienst can reclassify these
Benefits to non-employees (freelancers, contractors)

The 80% Penalty Tax (Eindheffing)

If an employer's total discretionary WKR benefits exceed the free space, the excess is taxed at 80%. This is called "eindheffing" (final levy).

Example — Company with €20,000 free space that spends €25,000 on WKR benefits:

Excess: €25,000 − €20,000 = €5,000
Penalty tax: €5,000 × 80% = €4,000 (paid by the employer)

The 80% rate is intentionally punitive — it discourages employers from exceeding their budget. In practice, most employers carefully track their WKR spending to stay within the free space.

As an employee, this penalty does not affect you. Your benefits remain tax-free regardless. The employer bears the cost.

Common Mistakes

Not knowing what benefits are available — Many employees do not realize their employer offers travel allowances, WFH allowances, or training budgets. Check your employee handbook or ask HR.
Claiming both travel and WFH allowance for the same day — Your employer can only provide one per day. If you commute to the office, you get the travel allowance. If you work from home, you get the WFH allowance.
Assuming all employer gifts are tax-free — Small gifts (within the free space) are tax-free. But if the employer's WKR budget is exhausted, additional gifts may be added to your taxable salary.
Not using the training exemption — Job-related training costs are unlimited targeted exemptions. If you want to take a professional course, ask your employer to fund it through the WKR rather than paying out of pocket.
Confusing WKR with salary negotiation — The WKR provides tax-free perks on top of salary. It is not a substitute for a fair salary. Use it as an addition, not a replacement.