Commuting expenses

The Labour Foundation has issued an advisory report on the future of commuting allowance at the request of the government. The Foundation is the national consultative body of the central organisations of employers and employees in the Netherlands. The advice contains 12 recommendations for the cabinet and social partners on car transport, bicycle transport and public transport.

Car transport

Recommendation 1: Continue to closely monitor the level of untaxed mileage allowance
The Foundation considers it desirable to properly substantiate the level of €0.23 per kilometre and allow it to grow with rising costs. An investigation into raising the tax flat rate is recommended, so that employees do not have to add too much to their commuting expenses. The €0.23 currently seems to cover only variable costs. It will not be possible to reimburse all the costs of the car, as there is also private use by the employee and it depends on the employee's car what the costs actually are, but the Foundation calls on the government to consider whether part of the fixed costs of a car should be included in the next review of the mileage allowance.

Recommendation 2: Review whether collective agreements around mileage reimbursement are sufficient
The Foundation points out that the untaxed travel allowance can be very interesting from a tax point of view for both employers and employees, and calls on sectors to look closely at its potential. The Foundation concludes that the untaxed limit of €0.23 works only to a limited extent as a standard. There also seems to be a correlation between income and the level of compensation. There may be good reasons for this at sector level, and possibly a lower mileage allowance is compensated by better working conditions in other areas. But sectors should carefully consider whether groups of employees, especially those with lower incomes, are not unreasonably disadvantaged by this. The extent to which public transport offers an alternative in terms of availability and working hours should also be considered.

Recommendation 3: Explore the use of the tax option of a cafeteria scheme
Fiscally, it is possible to have a gross amount paid out net by using the targeted exemption of €0.23 if it is not or partially used. Via a cafeteria scheme, other means of transport, such as the purchase of a bicycle, can also be funded. The Foundation calls on sectors to consider whether this can be used more often.

Recommendation 4: Scrap the additional tax on the shared car
It follows from the Tax Administration's memorandum outlining the tax consequences of the use of shared cars that more often than expected there may be a case of a (shared) car being made available, for which an addition to the employee's salary must be made. This may also be the case if the employer provides a mobility budget. The Foundation finds it illogical that if a mobility budget allows an employee to arrange his or her own transport, e.g. via a shared car, an additional taxable benefit must also be paid on this.

Recommendation 5: Allow untaxed reimbursement of parking costs in addition to €0.23 per kilometre
Parking near the workplace can lead to unequal treatment between employees with and employees without lease cars and between employers with and employers without their own parking facilities. After all, with a lease car, parking costs are reimbursed as business expenses. If an employee without a lease car has parking costs, these costs can only be reimbursed tax-free if the total costs remain below the tax-free mileage limit of €0.23. The Foundation recommends removing this unequal treatment and considering parking at the workplace as part of commuting and therefore tax-free reimbursement in addition to the tax-free kilometre allowance of €0.23. Following on from this, the Foundation believes it is illogical that parking costs at a P+R cannot be reimbursed untaxed. However, a tax-free mileage allowance can be provided for the journey from home to the P+R, and subsequent use of public transport can also be tax-free. The Foundation considers it illogical that the intermediate essential link of parking when changing from private to public transport cannot be reimbursed untaxed. 

3.2 Public transport

Recommendation 6: Maintain and improve the public transport deduction scheme
The evaluation shows that the ov deduction scheme is now relatively little used, but that there is an over-representation of young people and lower incomes. Even though the scheme has been evaluated negatively, the Foundation believes it is unwise to abolish this deduction scheme altogether. The deduction is very useful for lower-income workers.

Recommendation 7: Raise awareness of ov card options
The bottlenecks surrounding the provision of an ov-card seem to have been largely resolved. It is no longer necessary to have a route card in order to receive tax-free reimbursement. The Foundation thinks that there may still be too little awareness of this and is happy to bring this to the attention of decentral social partners.

3.3 Bicycle transport

Recommendation 8: Come up with a legislative amendment to remove the additional charge for share bikes
Even with strictly business use of a share bike, the addition of 7% applies if the employer makes the bike available for commuting. In that case, according to the Inland Revenue, a share bike is a lease bike, provided by the employer. Even the use of the public transport bike is covered by this additional taxable benefit. The Foundation finds this problematic and would urge the government to adjust this. This could be done by amending the law so that (demonstrable) strictly business use of the shared bicycle does not constitute a lease bicycle to which the additional taxable benefit applies.

Recommendation 9: Explore an interest-free loan as an option for purchasing a bicycle
Currently, two-thirds of workers receive no compensation when they cycle to work. In addition, for half of the employed there is no possibility to save up for a bicycle for tax purposes. Often, employees have to buy their own bicycle if they want to use it for commuting. Companies that do use a bicycle plan work with a leased bicycle, for example.

The Foundation would also like to alert decentralised collective bargaining parties to the option of an interest-free loan, which is often more favourable for an employee. With an interest-free loan, an employee can take out a loan to purchase an (electric) bicycle and then pay it back via the travel allowance. Suppose an employee receives €100 a month in travel allowance, they can pay off a €1,200 bicycle in a year. These travel expenses are tax-free up to €0.23 in the case of a private bicycle and an interest-free loan falls under the tax authorities' nil scheme. Moreover, after paying off the loan, the employee can continue to receive these travel expenses as normal. This is in contrast to a leased bicycle, where the employee cannot receive a travel allowance. Another disadvantage for employers is that an interest-free loan gives less guidance on an incentive to cycle. Finally, another option for employers may be to use a cafeteria scheme to purchase a bicycle from gross wages. 

3.4 Other recommendations

Recommendation 10: Examine whether a variable travel allowance is well used
The fixed travel allowance was widely used in the past and it has now been replaced by a variable travel allowance at many employers. A variable travel allowance is calculated based on the actual number of kilometres travelled. This requires employees to keep track of their travel records, such as mileage or ov receipts, to claim this allowance. A disadvantage of this may be that it increases non-use, as it requires more from the employee to claim expenses.

The Foundation recommends evaluating whether a variable travel allowance does not lead to too much non-use. If the employer pays a fixed, periodic, exempt travel and home-work allowance to the employee, which is based on a written agreement on how often the employee works from home and travels to the office, an occasional travel pattern adjustment need not be made. This occurs when the employee has to travel to the office on a home working day for a departmental event, attend an external course or travel to a client. In cases where there is no such written agreement, it would be good to be able to add more flexibility without too much administrative burden. Recommendations 11 and 12 deal with this situation.

Recommendation 11: Make it possible to work both at home and at the office in one day
Indeed, without the written agreement, it is not fiscally possible for an employee to work partly in the office and partly at home on the same day while retaining the exempt travel and home working allowance. The employee then has to choose whether to receive a travel allowance or a home-work allowance. This is awkward, as the very incentive is for employees to spread travel movements more throughout the day to reduce congestion and congestion. An employee should not be penalised for going to the office for part of the day and otherwise working from home.

Recommendation 12: Reduce administration burden for occasional extra office days
In the case of an occasional extra office day, the employee will have to manually administer that he is waiving the home office allowance (or the travel allowance, but it is usually higher). This must then be processed in the records. That's a lot of administration for a small amount. By analogy with the margin there is with a travel allowance, it would be good if there were more flexibility so that an employee does not immediately run into all kinds of administration when an occasional extra office day comes up.

Note: This opinion may come into play in the proposed amendment to the tax system, perhaps earlier.