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Written by:
Sean-Paul Smit


The “necessity criterion” as part of the WKR scheme

Some employers reimburse their employees for expenses incurred in the line of duty (“reimbursements”) while others prefer providing their staff with particular employer-paid resources (“provisions”). The fiscal treatment of reimbursements and provisions is essentially the same. Some reimbursements and provisions remain untaxed while others do not. It is the WKR scheme (work-related expense scheme) which dictates the fiscal treatment of reimbursements and provisions.

Central plank

The central plank of the WKR scheme is that reimbursements and provisions made available to employees are to be regarded as forming part of the latter’s wages. A free margin in the amount of 1.2% of the wage bill applies within which reimbursements and provisions may be made on a tax-exempt basis. It is up to the employer to decide which of the reimbursements and/or provisions should be defined as “final levy components” and thus, be classified as forming part of the free margin. It follows that any reimbursements and/or provisions handed out to staff over and above the employer’s free margin for the year end up being treated as taxable wages. The relevant final tax levy – to be settled up by the employer rather than the latter’s employees, it should be noted – is calculated at an 80% rate.

“Necessity criterion”

The “necessity criterion” offers the employer the option of not having to make allowances for the benefits enjoyed by the employee by virtue of particular employer-furnished resources. These provisions do not affect the free margin, which thus remains available to be used up in connection with other reimbursements and provisions. Application of the “necessity criterion” is strictly confined to tools, computers, mobile communication resources and devices of a similar nature. It is permissible for the employer to call upon the employee him or herself to make a contribution (as a deductible of sorts) to resources being made available to him or her on application of the necessity criterion.

When a particular provision has ceased being indispensable in order for the recipient employee to carry out his or her duties, it is the employee’s duty to hand in the item in question to his or her employer. The possibility exists for the employee to hang on to the item in question on condition that he or she should recompense the employer for the item’s residual value.

Examples of application of “necessity criterion”

A carpenter’s hammer is an example of a bone fide “necessity criterion” tool, as is the instrument played by a member of an orchestra. If the musician in question (rather than the orchestra) owns the instrument he or she plays, this would enable the orchestra’s reimbursement to the musician for the latter’s use of the instrument to be classified under the “necessity criterion” regime. It should be noted that the orchestra does not have to reimburse the musician for every single expense associated with the latter’s instrument.

If the above has left you with any WKR-related questions, please get in touch with us. As always, we’ll be delighted to help you strike the right chord, or indeed hit the nail on the head if you prefer!

Dutch version: Het noodzakelijkheidscriterium in de werkkostenregeling

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