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Work-related Expenses Scheme nr. 1 – 2016 Tax Special Part I
Work-related Expenses Scheme
nr. 1 – 2016 Tax Special Part I
...
Work-related Expenses Scheme nr. 1 – 2016 Tax Special Part I
The group policy can be applied by a
withholding agent togeth...
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I - Update Work-related Expenses Scheme_pdf

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I - Update Work-related Expenses Scheme_pdf

  1. 1. Work-related Expenses Scheme nr. 1 – 2016 Tax Special Part I Work-related Expenses Scheme nr. 1 – 2016 Tax Special Part I The Work-related Expenses Scheme became mandatory for all employers as per 1 January 2015. The first date submission of the final levy components is in the wage tax return of January 2016. In addition, the standard practice criterion has been tightened as per 1 January 2016, the interest benefit of a staff loan is no longer valued at nil and a number of predetermined amounts have been adjusted. Therefore, please find in this newsletter a brief update of the Work-related Expenses Scheme, including setting up for 2015, the group policy and the tightening of the standard practice criterion. Please be informed that the 2016 Tax Special Part I is the first newsletter of a series. The 2016 Tax Special Part II will contain an update related to the interest benefit of the staff loan and some common allowances and benefits will. Settlement for 2015 with the declaration of this month, January 2016 If the discretionary margin (1.2% of total wage bill for tax purposes) is exceeded, there is a final levy of 80%. The final levy must be included in the wage tax return in January 2016, which must be submitted and paid, at latest at the end of February 2016. In order to determine the final levy components, it must be clear which allowances, benefits and provisions are designated as such. Currently, it is not entirely clear when this designation must have taken place at the latest, and how. Based on a Decree of the Minister of Finance the Tax authorities assume that, in case no individual remuneration has been taken into account during the calendar year, the remuneration has been appointed as final levy component. Please note that no further prescribed form for this recognition is provided and as a result this can take place in the financial accounts as well as, for example, in an Excel file. We highly recommend you to make sure your accounts are in order and that the final levy components are identified. This prevents the Tax authorities from individually taxing employees later for certain allowances, benefits and provisions. Group policy In general, under the group policy, the aggregate wage costs of the companies within a group are added together for purposes of calculating the discretionary margin. An advantage of applying the group policy is that the not used discretionary margin of one withholding agent can be set off against the exceeded discretionary margin of the other withholding agent. As a result, less or no final levy could be due. You can opt for the application of the group policy when submitting the declaration of January 2016 at the latest.
  2. 2. Work-related Expenses Scheme nr. 1 – 2016 Tax Special Part I The group policy can be applied by a withholding agent together with another withholding agent, if the following requirements are met during the entire calendar year:  the withholding agent has a stake of at least 95% in such other withholding agent; or  such other withholding agent has a stake of at least 95% in the withholding agent; or  a holding company has a stake of at least 95% in the withholding agent, while this holding also has a stake of at least 95% in the other withholding agent. Please note that a stake involves a stake in the share capital. If the group policy is opted for, this will apply to all group entities that have met the ownership requirement of at least 95% during the entire calendar year. Therefore, it is not possible to exclude specific group members. TIP The group policy can also be applied in case there is an intermediate holding company without employees. An advantage of the group policy is that a collective margin is created for all withholding agents of the group. The withholding agent with the highest total wage bill for tax purposes declares the final levy as a result of exceeding the combined discretionary margin and pays this. Please note that all withholding agents of the group are liable for the final levy due. Furthermore, all withholding agents of the group are obliged to include certain reporting items in their accounts. Tightening of standard practice criterion for Work-related Expenses Scheme In general, the standard practice criterion puts a limit on the allowances and benefits that can be allocated to the discretionary margin. Further, your allowances and benefits cannot be allocated to the discretionary margin if they differ more than 30% from that which is normally paid or provided. As per 1 January 2016 the criterion has been tightened. Not only the allowance or benefit itself should be customary, but it must also be customary that your employees receive such allowance or benefit tax-free and that taxation is for your account via the final levy. Please note that this newsletter is intended to provide general information only. Professional advice is highly recommended before committing to formal obligations. Contact If you have any questions or comments related to this newsletter, or any other tax related questions, please contact Marc van den Dungen or Eline Nouwen of Auren, the Netherlands. They are more than happy to assist you. Auren Amsterdam Biesbosch 225 1181 JC Amstelveen Postbus 15968 1001 NL Amsterdam Marc van den Dungen LLM Tax Partner +31 20 645 8281 marcvandendungen@auren.nl Eline Nouwen LLM Tax Advisor +31 64 576 0867 +31 20 645 8281 elinenouwen@auren.nl

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