The outgoing Cabinet of the Dutch government has made two important decision in terms of payroll administration. The ‘vrije ruimte’ (the scope of tax-free accumulated personnel costs) has again been increased for 2021 and the temporary measure allowing employers to continue the payment of a tax-free, fixed travel allowance to employees has been extended by two months:
- Because of the impact of the coronavirus pandemic, the ‘vrije ruimte’ has been increased. The percentage applicable to the first € 400,000 of the total wage bill will go from 1.7% to 3% . This temporary increase was already in effect in 2020. Different from last year, however, is the percentage applicable to the wage bill above € 400,000, which will be 1,18%.
- The temporary measure introduced in 2020, which regulates that changes in the commuting habits of an employee who works from home more often will not affect the fixed travel allowance (s)he receives, will remain in effect until April 1, 2021. Until that date, you can continue to pay employees a tax-free, fixed travel allowance based on the commuting habits prior to the coronavirus pandemic.