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Work Cost Rule – Intermediary costs


The Work Cost Rule is effective as of January 1 2015 compulsory for all payroll administrations and within the payroll 1.2% of the total salary costs can be paid tax free, other costs can be paid at 80% taxation. However, intermediary costs can be paid tax free.

What are intermediary costs?

The silly examples we have seen so far are far fetched. For instance the employee is visiting a mall during the weekend, sees the table chairs the employer desires, purchased them and the reimbursement of these costs are regarded intermediary costs. Why is this a silly example? The employer will never agree with the employee making such a purchase, as the invoice will be made in the wrong name and paid from the wrong account, hence the VAT cannot be reclaimed. The chairs will therefore be 21% too expensive.

On our remark that this is a silly example we were thrown the reply that the employee must have had a company card with him (?). I doubt employees do have such a card with them as much as I doubt employees will purchase anything for their employer during their weekend off.

Yesterday the first example was provided by Mr Hoogstraten at the Kluwer VN Congres. Mr Hoogstraten works with the tax office. His example was that of the employee driving a company car that falls to drive for some reason and is towed away and most tow company demand to be paid on the spot. The reimbursement of these costs are indeed intermediary costs. As are the costs of petrol use abroad, where the company petrol card does not work, being reimbursed by the cost rule intermediary costs



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