An employer cannot make a regular fixed expense allowance tax-free for earlier months when the cost study followed the costs. That timing affects payroll tax, WKR free space, and the employer’s cash cost.
Why this matters
A catch-up payment can need different payroll treatment. Documented past costs may qualify as actual-cost reimbursements under a targeted exemption. Other amounts may be taxable wage or use WKR free space. In 2026, WKR free space is 2.00% of fiscal payroll up to €400,000 and 1.18% above it. Excess triggers 80% final tax. The payment date does not decide the treatment. The payroll file needs the cost date, employee entitlement, and payroll entry.
Example
In September, an employer sets a €50 monthly allowance from April. The cost study finishes before a December catch-up payment. It is too late to treat April through December as a regular fixed allowance. Staff had already incurred those costs. The employer can assess the past costs separately. Evidence may support reimbursement. Future €50 payments need a prior cost study, defined employee group, cost categories, decision date, and payroll treatment.
XTROVERSO tips
- Separate past costs from future allowances. Do not use one payroll label for both periods. Record the amount and tax treatment for each period separately.
- Build a file for historical costs. Keep invoices, declarations, calculations, and other records that make the employee’s actual costs plausible.
- Set up future allowances in advance. Document the cost study, employee group, cost categories, monthly amount, and start date before employees incur the covered costs.
- Check payroll and WKR before payment. Confirm the payroll code, timely designation, available free space, and possible final tax before the payment leaves the bank.
- Review exceptions separately. Keep travel and home-working allowances in separate files. For costs from an earlier calendar year, check whether employees already had an unconditional right to reimbursement.
Need a second check on an allowance, payroll file, or WKR position? We can review the facts before you process payment
The data, sourcing, and analysis behind this article were conducted by Linda Pavan. AI was not used to identify sources, build the factual basis, or produce the analytical judgment contained here. AI was used only as a drafting aid. The final English text was personally reviewed, edited, and approved by Linda Pavan before publication.
References
- KG:204:2026:17 Vaste vergoeding met terugwerkende kracht | Kennisgroepen Belastingdienst
- Belastingdienst | Handboek Loonheffingen
- Belastingdienst | Werkkostenregeling
- KG:204:2023:12 Herrekening vaste reis- en thuiswerkvergoeding | Kennisgroepen Belastingdienst
- KG:204:2026:11 Vaste kostenvergoeding uitzendkrachten | Kennisgroepen Belastingdienst
- Hoge Raad 7 maart 2008 | ECLI:NL:HR:2008:AB7763
