Allowances, benefits in kind and provisions

You may spend part of your total taxable salary on tax-free allowances, benefits in kind and provisions for your employees. We call this the discretionary margin. In 2025 the discretionary margin (vrije ruimte) is 2.00% of your taxable wages up to €400,000. The discretionary margin above this amount is 1.18%. You can also provide, pay for or make certain items available tax-free by using targeted exemptions and nil valuations.

You pay wage tax in the form of a final levy of 80% over the amount that exceeds the discretionary margin.

Specific exemptions

Specific exemptions are applicable to a number of allowances, benefits in kind and provisions. These are exemptions at employee level for specific costs incurred by your employee. These specific exemptions include, for example, allowances, benefits in kind and provisions for extraterritorial costs, transport, meals, overnight stays, courses, congresses, studies and training courses. These exemptions are usually governed by maximum amounts. Specific exemptions are not debited from your discretionary margin.

If the allowances, benefits in kind and provisions exceed the maximum amounts, the excess is taxed wages for your employee. You may also choose to designate this as final levy wages. If you do not include any of the excess in your employee’s wages, the excess part of the allowance, benefit in kind or provision is taken from your discretionary margin.

Nil valuations

A number of provisions are valued at nil, for example work clothing or refreshments at work. These nil valuations avoid the situation in which provisions at the workplace would be debited from the discretionary margin. These nil valuations are not debited from your discretionary margin. Nil valuations are applicable solely to wages in kind, usually in the form of provisions, and not to monetary reimbursements. If you provide a facility, you continue to be the owner of this facility.