WKR Netherlands: Employer Responsibilities Explained.

⏱ 8 min read

Last updated October 22, 2026

The WKR is a Dutch tax scheme that allows employers to provide tax-free allowances, benefits in kind, and provisions to employees. It has been mandatory since 2015 for all employers in the Netherlands.

The scheme is based on the principle that everything provided to employees is taxable, unless it is defined under specific exemptions or within the Discretionary Scope / budget, referred to in Dutch as Vrije Ruimte.

The employer is responsible for applying the WKR and deciding which discretionary benefits to offer. HR may propose benefits, while finance and payroll assess the budget, tax treatment and administration.

This article explains how to organise the steps and actions that follow from the WKR work throughout the year.

WKR Percentages

Under the Work-Related Costs Scheme (WKR), employers can designate certain reimbursements and employee benefits as final levy wage components. Qualifying benefits can then be provided without taxing them through the employee’s salary.

The Discretionary Scope is the annual budget available for these benefits. It is calculated as a percentage of your organisation’s total annual taxable wages. One percentage applies to the first EUR 400,000. A second percentage applies to the amount above this threshold and these WKR-percentages will be established each year by the Dutch Tax and Customs administration of the Netherlands.

 WKR-Percentages 2026

The Discretionary Scope of the Work Related Costs Scheme for 2025 and 2026 is calculated as follows:

• 2.00% of the taxable wage sum up to EUR 400,000
• 1.18% on the amount exceeding EUR 400,000

Within this budget, employers can provide eligible benefits, such as Christmas gifts and external gym subscriptions, tax-free to employees. Qualifying travel reimbursements and business-related meals may instead fall under targeted exemptions and therefore do not use the discretionary budget.

 WKR-Percentages 2027

In 2027, the Discretionary Scope of the Work Related Costs Scheme is:

• 2.16% of the taxable wage sum up to EUR 400,000
• 1.18% on the amount exceeding EUR 400,000

WKR Examples Tax-Free Benefits & Allowances

In summary the WKR costs-categories include:

• Tax-free reimbursements within the Discretionary Scope.
• Fully exempt costs: Targeted Exemptions.
• Workplace provisions labelled in the Nil Valuations.

For the underlying rules and the list of examples of tax-free benefits, please read our article: WKR Netherlands: Insights Tax-Free Employee Benefits and Allowances.

What If an Employer Does Not Have a WKR Approach?

The WKR is part of the Dutch payroll tax framework. It is not an optional employee benefit scheme that an employer must register for separately. The absence of a structured administration can make it difficult to determine whether benefits have been correctly classified and whether the discretionary budget has been exceeded. Existing errors should be reviewed with the payroll provider or tax adviser. Benefits cannot simply be retrospectively relabelled as tax-free without checking the applicable rules.

To establish a clear approach, the employer should:

1. Ask the payroll provider or accountant how existing reimbursements and benefits are currently treated.
2. Prepare an overview of benefits, including expense claims, gifts, events, equipment and fixed allowances.
3. Classify each item as taxable wages, an excluded reimbursement, a targeted exemption, a nil valuation or a benefit charged to the discretionary budget.
4. Calculate the available budget and decide which additional benefits the organisation wishes to offer.
5. Record designation decisions and supporting conditions in the financial and payroll administration.
6. Assign responsibility for monitoring expenditure and calculating any final levy.
7. Communicate the approved benefits and claiming procedures to employees.

Finance & HR Department Responsibilities WKR

The finance and HR department are playing a central role in managing WKR-related benefits. They are responsible for:

1. Ensuring benefits are properly administered.
2. Classifying reimbursements and provisions to ensure that all WKR benefits meet the conditions set by the government.
3. Writing proper documentation and designation in the payroll records.
4. Collaborating with various teams to maintain a compliant and efficient WKR administration.
5. Informing employees about available tax-free benefits, eligibility criteria, and how to claim them, fostering transparency and trust.

How Do HR, Finance and Payroll Coordinate?

HR should inform Finance and payroll when a new benefit is proposed. Finance should flag employee-related spending that has not been assessed. Payroll should explain what information is needed before payroll processing.

The Role of the Works Council

The Works Council may be involved in advising or approving certain employee-related benefits and can provide input on how the Discretionary Scope is allocated, especially when it affects employee welfare.

Furthermore, they need to be informed about the transparency of the distribution of employee benefits and may influence decisions on fixed allowances, team events, and other perks that fall under the WKR.

Employer Preparation for Works Council Discussions

Identify the proposed decision before preparing the discussion with the Works Council. Is the company introducing an administrative process? Changing eligibility for benefits? Amending a reward system? The Works Council does not automatically have a right of consent over every WKR matter.

Prepare a clear discussion pack with:

• The current arrangements and the proposed changes.
• The reasons for the proposal.
• The employee groups affected.
• The financial and tax implications.
• Any changes to eligibility or employee contributions.
• The proposed implementation timetable.
• The decisions made globally and those still open locally.

Works Council members can prepare by asking how benefits are allocated, how centrally funded benefits are captured and how management will monitor the arrangements. Their focus should be on the proposed policy and its collective consequences.

Note: Article 27 of the Dutch Works Councils Act (WOR); Right for Consent by the Works Council may be required where a proposal establishes, amends or withdraws a listed arrangement, such as a remuneration system. Employers must ensure that any involvement of the Works Council is documented, aligned with internal governance procedures and Works Council consultation process.

Managing the WKR Work During the Year

Overview of Benefits and Reimbursements

Start with ensuring there is an overview of the benefits and reimbursements provided to employees in the Netherlands. This overview should include recurring arrangements and occasional spending. Identify who will approve each benefit, who will pay for it and who inform payroll accordingly.

Next, agree how the tax treatment will be checked. Some of the tax-free benefits and allowances may qualify for a targeted exemption or nil valuation. Others may be charged to the Discretionary Scope. Certain benefits must be processed as taxable employee wages.

Set a Regular Review Date

It is important to set a regular review of the WRK. A monthly review can support organisations with frequent transactions. A quarterly review may suit an employer with fewer benefits. The WKR review should show at minimum:

• The estimated annual Discretionary Scope.
• Benefits already charged to it.
• Approved benefits that have not yet been provided.
• Other planned spending.
• The forecast remaining budget.
• Any expected final levy.

How Do You Check the Budget Before Approving Benefits?

First, ask payroll for the latest estimate of annual taxable wages. Apply the percentages for the relevant year. Update the forecast when salary increases, bonuses or workforce changes affect the wage total.

Then establish how much of the Discretionary Scope has already been used. Deduct planned spending that is expected to use the same budget. Before approving a new benefit, ask:

• What is being provided, and to whom?
• Does an exemption or nil valuation apply?
• If it uses the Discretionary Scope, is the designation permitted?
• What value must be recorded?
• How much budget remains after existing commitments?
• What additional tax cost could arise?

A Practical Sequence for Employers

1. Map all existing benefits, including both local and centrally funded arrangements.
2. Assign responsibility by naming an owner for the consolidated overview.
3. Confirm the tax treatment of each benefit and resolve any uncertainties before providing it.
4. Calculate the forecast budget using current payroll information.
5. Assess new spending alongside existing commitments and potential levy costs.
6. Review the overview throughout the year by reconciling records held by HR, Finance, payroll and headquarters.
7. Prepare for consultation by assessing Works Council rights before changing relevant arrangements.
8. Complete the annual reconciliation by confirming the final figures and the reporting deadline.

Headquarters Outside of the Netherlands

International organisations should include centrally funded benefits in their Dutch review. Examples include gifts, recognition awards, subscriptions and events arranged outside the Netherlands.

Payment by headquarters for employee benefits in the Netherlands does not automatically remove a benefit from Dutch payroll tax obligations. A benefit provided by another group company with the Dutch employer’s knowledge can constitute employer wages, even without a recharge. The treatment depends on the circumstances.

More Information

• WKR Netherlands: Insights Tax-Free Employee Benefits & Allowances.
• Company Bike Scheme in the Netherlands.
• 30% Ruling Netherlands Explained for Employers and HR.