Since 1 July 2014, work-related costs are no longer deemed to form part of the salary under the Senior Officials in the Public and Semi-Public Sector (Standards for Remuneration) Act (WNT). This offers the possibility of paying regular wage components as 'work-related cost', therey potentially allowing for the strict WNT standards to be exceeded.
Final levy component for employer's account
This works as follows: the work-related costs scheme allows employers to designate payments and non-cash benefits as final levy components. The tax levied on these final levy components is for the employer's account. Since 1 July 2014, therefore, these work-related costs are disregarded when determining the maximum WNT standard.
Standard practice criterion for designating payments
During a debate in the Lower House of the Dutch Parliament, Ronald Plasterk, Minister of the Interior and Kingdom Relations, indicated that the WNT standards could not be circumvented, however, and that there is no 'loophole' in the law since a so-called (fiscal) standard practice criterion applies to the designation of payments and non-cash benefits as a final levy component. This means that the salary components designated in this manner should not be significantly greater than standard practice in similar circumstances. In practice, the Dutch Tax and Customs Administration applies an effective threshold of € 2,400 per person per annum in this regard.
Tax Plan 2015
Apparently, the Ministry of Finance is not entirely sure of its facts, however. The parliamentary papers accompanying the Tax Plan 2015 refer to plans to tighten the standard practice criterion so that it provides greater leverage in preventing improper application of the WKR. It is not yet known in what way the criterion will be tightened.
If you have any questions about this matter or any other questions about the WNT or WKR, please contact Constant van Tuyll van Serooskerken.