An expense allowance looks simple: your employee pays for something up front, you pay it back. Until the Dutch Tax and Customs Administration comes round and concludes that you have been paying out taxable salary for years without remitting payroll tax on it.
What exactly may you reimburse tax-free? Which amounts apply in 2026? And what do you need to record to avoid an additional assessment? In this article you will find a clear overview of the rules, the current amounts and the pitfalls, including if you are a director-shareholder, a freelancer or a board member of a foundation.
What is an expense allowance?
An expense allowance is a payment an employer makes for costs an employee incurs in order to carry out their job. Think of travel costs, a training course or spending during a business trip.
For tax purposes these allowances count as indirect labour costs: they come on top of the salary, but they depend on the situation of the individual employee. The employee claims the costs first, then you pay them out. If you want to know more about the tax side of running a business, take a look at the tax rules for entrepreneurs.
An expense allowance is not required by law. A collective labour agreement or employment contract may, however, contain arrangements that bind you. Without a collective agreement you decide yourself whether and how much you reimburse, as long as you stick to the tax rules.
What are expenses?
Expenses are outlays someone makes for work that do not belong to ordinary private life. It concerns costs with a business character: the train to a client, a parking ticket at an appointment, materials needed to do the job.
Costs everyone incurs anyway, such as ordinary clothing or the daily lunch at home, do not fall under it. That distinction determines whether you may reimburse something tax-free or not.
What does an expense allowance cover?
The costs employees claim vary widely per role and per company. These are the items that come back most often in practice:
Travel costs: commuting and business trips by own transport or public transport.
Working-from-home costs: extra costs for energy, coffee, water and use of the home workspace.
Training and study: courses, professional literature and further training the employee needs for their work or to stay in work.
Temporary stay: overnight stays, meals and accommodation costs during business trips or temporary work elsewhere.
Necessary equipment: tools, a laptop, phone or tablet that is demonstrably needed for the role.
Work clothing: clothing that is only suitable for work or carries a company logo.
Entertainment costs: business lunches, dinners and gestures with a clear business purpose.
When is an expense allowance taxed and when is it tax-free?
The starting point of the law is strict: everything you pay or provide to an employee is salary. Including a reimbursement of costs. Only once an allowance falls under a specific exception may it remain tax-free.
That explains why employers are corrected on this so often: the allowance itself is not the problem, the substantiation of the exception is.
Taxed expense allowance
A taxed expense allowance counts as salary. You withhold payroll tax and contributions on it, exactly as with salary. This mainly comes up with costs that are really private: ordinary clothing, shoes, personal care or a phone contract used mostly privately.
In practice a taxed allowance is rare, because most business costs do fall under an exception.
If the employee receives a tax-free allowance, that is a net amount: nothing more comes off it. A taxed allowance is a gross amount, so the employee is left with less net.
Tax-free expense allowance: four routes
There are four routes by which an allowance reaches your employee tax-free. They all work differently, and that difference determines whether the allowance eats into your tax room or not:
Intermediary costs: your employee pays up front for something that is yours or is for your account, such as office supplies or fuel for the company car. This is not salary at all, has no maximum and does not use up your discretionary margin.
Specific exemptions: costs the law explicitly designates as tax-free, such as business travel costs, working from home, training, temporary stay and necessary equipment. These do not cost you any discretionary margin either, provided you meet the conditions.
Nil valuations: facilities at the workplace itself that are valued at zero, such as coffee, the fit-out of the workspace and work clothing with a logo.
Discretionary margin: anything that does not fit the first three routes can be designated as final levy pay and placed in a budget that is a percentage of your wage bill. Think of a Christmas hamper, a company outing or a net bonus.
Together these four routes form the work-related costs scheme, WKR for short. That scheme has been mandatory for every employer since 2015. So you cannot choose not to apply it, you can only use it well or badly.
How much expense allowance may you give tax-free in 2026?
How much you may reimburse tax-free depends on the route. For the discretionary margin a percentage of your total taxable wage bill applies; for the specific exemptions there are fixed amounts per day or per kilometre. These are the amounts that apply in 2026.
Item | 2026 |
Discretionary margin up to a € 400,000 wage bill | 2.00% |
Discretionary margin above a € 400,000 wage bill | 1.18% |
Final levy on any excess | 80% |
Working-from-home allowance per day | € 2.45 |
Mileage allowance per kilometre | € 0.25 |
Efficiency threshold per employee per year | € 2,400 |
An example makes it concrete. With a wage bill of € 300,000 your discretionary margin is 2% of that, so € 6,000. Stay below that with everything you have designated and you pay nothing. If you end up at € 7,000, you pay 80% final levy on the € 1,000 above it. That is € 800 extra, on an amount you had already spent.
The mileage allowance and the working-from-home allowance are specific exemptions, so they do not eat into your discretionary margin. Note that you have to choose per employee per day: travel allowance or working-from-home allowance, not both.
For a business trip that is not commuting, the combination is allowed. Everything about the conditions and the calculation is set out in the article on the travel allowance for employees.
Fixed expense allowance or claiming on the basis of receipts?
For the practicalities you broadly have the choice between a fixed monthly amount and claiming per receipt. Both may be tax-free, but they ask something entirely different of your administration. The choice also determines how exposed you are at an audit.
Fixed expense allowance and the mandatory cost survey
A fixed expense allowance is a set amount per month with which you cover several small cost items in one go. Administratively that is convenient, but the Dutch Tax and Customs Administration attaches a hard requirement to it: you have to substantiate the allowance by nature and assumed size, on the basis of a sample of the costs actually incurred.
In practice you have a representative group of employees keep track of their spending for three months and determine the amount per cost category on that basis.
If that cost survey is missing at an audit, the conclusion is taxable salary. At that point the discussion is no longer about whether your employee really incurred those costs, because without a survey that is not relevant for tax purposes. Repeat the survey periodically and adjust the allowance as soon as the circumstances or the employee’s role change.
Claiming on the basis of actual costs
With claims based on actual costs your employee submits receipts and invoices with a claim form. You reimburse exactly what has been spent.
That takes more processing time, but the substantiation is automatically in your records, because every amount has a receipt. For costs that vary a lot from month to month, such as business trips, this is nearly always the safest route.
If you combine both forms, watch out for double reimbursement. Costs already included in the fixed amount may not be claimed separately again by your employee.
What happens in the event of illness?
In the event of illness you may continue to pay a fixed expense allowance for one more month. After that the allowance counts as taxable salary, and that makes sense: after all, your employee is no longer incurring the costs.
An exception applies to costs that demonstrably continue, such as an annual subscription to a trade journal that cannot be cancelled in time. You may keep reimbursing those tax-free.
How do you avoid an additional assessment on expense allowances?
A mistake in an expense allowance is rarely a small amount. With an incorrect claim the Dutch Tax and Customs Administration extrapolates: the monthly allowance times the number of employees, times twelve months, times five years.
An allowance of € 50 per month for ten employees thus becomes a correction of € 30,000, quite apart from penalties and tax interest. These points keep it in order:
Record it per category: break the allowance down into travel costs, entertainment, phone and other items, so you can substantiate per item where the amount comes from.
Draw up expense claim rules: set out what is and is not claimable, how employees submit claims and within what deadline.
Have claims submitted quickly: ask for claims shortly after the outlay and not only at the end of the year, while receipts are still complete.
Check immediately: approve or reject claims straight away and feed mistakes back, so the same mistake does not run on for twelve months.
Monitor your discretionary margin during the year: check how much room you have left as the year goes on, not only at the year-end close when adjusting is no longer possible.
Also mind the customary-use test. What you designate as final levy pay may not deviate by more than 30% from what is customary in comparable situations. The Dutch Tax and Customs Administration applies an efficiency threshold of € 2,400 per person per year for this: up to that amount the tax authorities take no action.
That threshold is not in the law but is enforcement policy. Specifically exempted allowances do not count towards it, because the test does not apply to those.
Expense allowance as a director-shareholder or freelancer
The rules around expense allowances are almost always explained from the perspective of a company with staff. If you work for yourself, the question is slightly different: may you reimburse yourself tax-free? The answer differs completely per legal form.
As a director-shareholder you reimburse yourself through the work-related costs scheme
If you are a director and majority shareholder, you are employed by your own private limited company and therefore simply an employee. That means the work-related costs scheme applies to you too. On a taxable salary of € 60,000 your discretionary margin is 2%, so € 1,200 you can pay yourself tax-free.
In addition you can make use of the specific exemptions for things like travel costs, working from home and necessary equipment. If you have several companies, the group scheme is interesting.
The discretionary margin is then calculated not per company but across the total taxable salary of all companies combined, so unused room in the operating company remains available. You can read more about setting that up on the page about a business account for your holding company.
Do not confuse an expense allowance with money you take out of your company through the director-shareholder current account: the first is a reimbursement of costs incurred through the payroll, the second is effectively a loan from your own company.
As a freelancer you do not give yourself an expense allowance
If you have a sole trader business, you cannot give yourself an expense allowance. There is no employer and no employee, so the work-related costs scheme does not apply. You deduct business spending from your profit as deductible business costs, which is an entirely different mechanism for tax purposes.
Do you, as a freelancer, receive an expense allowance from a client, for instance for travel costs or materials? Then that is simply turnover. You put it on your invoice, charge VAT on it where applicable, and deduct the costs themselves from your profit.
Expense allowance for volunteers and board members
If you work with volunteers, for instance in a foundation, an association or a homeowners’ association, a separate scheme applies. In 2026 you may pay a volunteer aged 21 or over a maximum of € 5.75 per hour, and € 3.40 per hour for volunteers under 21. Hard maximums of € 220 per month and € 2,200 per year apply on top of that. In 2024 and 2025 the annual maximum was still € 2,100.
Mind the aggregation rule: if the volunteer receives an expense allowance alongside the payment for their time, the Dutch Tax and Customs Administration adds those amounts together. If you exceed one of the maximums, the entire allowance is taxed, not just the excess.
If you want to pay more without a levy, that is only possible as a reimbursement of costs actually incurred and demonstrable. A further condition for the scheme is that your organisation is not liable for corporate income tax or is exempt from it, or that it is a sports association, sports foundation or public benefit organisation (ANBI).
How to arrange the finances of such an organisation in practice is set out on the page about a business account for a foundation.
Handling expenses without anyone having to pay up front
Most of the hassle around expense allowances arises at one moment: when someone pays privately for something business-related. From that point a receipt has to be kept, a claim submitted, an approval given and a payment processed.
And if something goes wrong along the way, the substantiation of your allowance is on shaky ground. With the GoDutch business account you stop that outlay from arising privately in the first place. You give your team virtual Mastercards or physical Debit Mastercards with their own limits, so every outlay sits on the business account immediately.
You scan receipts in seconds in the app or forward them by email, your expense overviews update automatically and you connect everything to bookkeeping software such as Exact, Snelstart, Twinfield, Yuki or Jortt. That way you keep real-time visibility of who is spending what and your records are ready the moment the Dutch Tax and Customs Administration asks for them.
Get your business spending under control quickly
Want to be rid of money paid up front and lost receipts? See what you can arrange with the GoDutch business account, applied for in 3 minutes and with your IBAN and card within 1 day. You choose how many cards you need and what limits they carry.
FAQ
Frequently asked questions about the expense allowance
What is the maximum expense allowance?
There is no fixed maximum amount for an expense allowance. How much you may give tax-free depends on the route: intermediary costs and specific exemptions have no ceiling within the discretionary margin, while your discretionary margin in 2026 comes to 2.00% of the taxable wage bill up to € 400,000 and 1.18% above that. If you go over it, you pay 80% final levy on the excess.
Is an expense allowance mandatory?
An expense allowance is not mandatory. What is mandatory is the work-related costs scheme: every employer has to apply it to everything they reimburse or provide. Whether you reimburse costs at all is up to you, unless a collective labour agreement or employment contract obliges you to.
Is an expense allowance paid out net or gross?
An expense allowance is paid out net if it is tax-free: the full amount reaches your employee. If the allowance is taxed, it is a gross amount on which you withhold payroll tax and contributions.
May you give a travel allowance and a working-from-home allowance on the same day?
You may not apply a travel allowance and a working-from-home allowance tax-free on the same day for the same employee. You choose per day which of the two you reimburse. If your employee makes a business trip that day which is not commuting, you may combine that with the working-from-home allowance.
Does an expense allowance count as salary?
An expense allowance counts as salary as soon as it does not fall under one of the four tax-free routes. For director-shareholders that is extra relevant: allowances you place in the discretionary margin that are not specifically exempted count towards determining your customary salary.
