For targeted exemptions and intermediate costs, you may give a fixed, untaxed expense allowance, which will not be at the expense of the free space. However, you must first investigate the costs actually incurred by employees. You can read more about this and find an example in an update to a tax authority guide.
If you do not do a cost test, the fixed expense allowance is the employee's salary. You can also designate the fixed expense allowance as final taxable income if the usability test is met. It will then fall under the free allowance. If the free allowance is exceeded, the employer will owe 80% final tax levy.
No cost study
Costs that are not specifically exempted and are not intermediate costs will always be charged to the free space if you designate them as final levy pay. You therefore do not need to perform a cost test for these costs. If you do not designate the allowance as a final taxable benefit, it will be part of the employee's wages.
Example
A sales organisation employs field sales staff. They handle sales and are on the road a lot. The employer gives a fixed expense allowance of €90 per month for the costs they incur on the road.
No cost study
The employer did not conduct an expense survey. He did designate the fixed expense allowance as final taxable income. The fixed expense allowance of €90 is charged to the free allowance. If the employer exceeds the free allowance, he owes 80% final levy.
Well cost study
The employer does conduct a cost survey because the field employees incur costs for items that are specifically exempt, or fall under intermediate costs. The cost survey shows that, on average, they incur the following costs per month:
- Parking lease car € 25
no targeted exemption
but intermediate costs
do not designate as final taxable income* - Meals and refreshments along the way € 50
targeted exemption
no intermediate costs
Do designate as final taxable income - Costume cleaning € 20
no targeted exemption
no intermediate costs
Do designate as final taxable income - Business gifts €8
no targeted exemption
but intermediate costs
do not designate as final taxable income*
* The employer does not have to designate the fixed expense allowance for parking lease car and business gifts as final taxable income, as these are intermediate costs. As the employer has done a cost survey, this is not a wage for the employee.
Based on the cost study, the employer decides to give a fixed cost allowance for the above amounts. In total, employees now receive a fixed cost allowance of €103.
Because the employer has carried out an expense survey, the following expenses are not charged to the free space:
- lease car parking
- meals and refreshments en route
- corporate gifts
Only the allowance for costume cleaning of € 20 is charged to the free space. This is because no targeted exemption applies and these are not intermediate costs.
Tip: We will be happy to advise you on whether a cost study makes sense in your company and how to carry it out.
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