For ordinary expense allowances, the evidence must exist before employees bear the cost.
It is September, and the payroll discussion begins with a fair observation. Employees have paid recurring work costs themselves since April. The founder wants to correct that. A monthly allowance of €50 seems reasonable, so the company plans one catch-up payment before year-end.
The cash can reach employees in December. That does not make the previous months a tax-free fixed allowance.
A Belastingdienst Kennisgroep position published on 25 September 2026 gives this familiar situation a clear payroll consequence. In its example, the employer completed a cost investigation before making the payment. The amount itself was accepted as plausible. Yet the payment covering 1 April to 1 December 2025 did not qualify as a fixed allowance under article 31a(4) of the Wet op de loonbelasting 1964.
The reason was timing. The investigation came after employees had already incurred the costs.
Timing changes the character
An ordinary fixed expense allowance is designed for future costs. The employer first investigates what employees actually spend, identifies the relevant cost categories and establishes a defensible average. Only then does the recurring allowance begin.
Completing that investigation before payment is not enough when the allowance covers an earlier period. A December spreadsheet may explain what happened since April, but it cannot turn those historical costs into a prospective arrangement.
The Dutch Supreme Court took the same approach in its judgment of 7 March 2008. Under the earlier wage-tax framework, the basis of an already paid fixed allowance could not be changed retrospectively. The current Kennisgroep position connects that principle to today’s work-related costs scheme.
The distinction is narrow, but its effect is practical. Past costs may still qualify for reimbursement under a targeted exemption when the employer can substantiate what the employee actually incurred. Invoices can provide that evidence, but they are not the only possible form. The inspector assesses whether the employer has made the costs plausible.
That is a reimbursement of actual costs. It is not the same as creating a fixed monthly allowance after the months have passed.
One payment, several possible outcomes
The bank statement may show one amount, yet payroll can face several different treatments. Part may represent evidenced historical costs. Another part may be a properly supported allowance for future months. An unsupported amount may become taxable wage or, where the conditions are met, designated final-tax wage within the werkkostenregeling, the WKR.
That choice affects both people and cash. Taxable wage can change the employee’s net result. WKR treatment uses the employer’s annual free space. In 2026, that space is 2.00 percent of fiscal wage up to and including €400,000, and 1.18 percent above that level. An excess is subject to 80 percent final tax for the employer. Unused space cannot move into the next calendar year.
Designation also requires discipline. The employer must generally make the choice no later than payment through the payroll administration. The customary-use condition still applies. WKR is not a repair box that finance can open freely after payment.
Earlier calendar years create another boundary. A reimbursement for costs from a previous year can follow the stated route only when the employee already had an unconditional right to reimbursement in that year. A new decision today cannot quietly create an old entitlement.
The policy has to match the people
The Belastingdienst’s 2026 payroll handbook requires more than a round monthly number. The amount must be plausible and broken down by exemption and cost item. The employer needs prior research into actual costs, a defined group of employees and the correct payroll designation. Changed circumstances may require fresh research.
This is where a tax question becomes a governance question. An allowance policy connects employment terms, HR decisions, employee groups, expense evidence, payroll codes, WKR capacity and the ledger. If those parts do not agree, the company may compensate staff with the right intention while recording the payment under the wrong character.
The same amount should not be copied casually across companies, departments or labour arrangements. A July 2026 Kennisgroep position on agency workers makes the wider control point clear. Comparable work is not enough by itself. The roles, conditions and actual cost circumstances must also support the same treatment.
Travel and home-working allowances deserve separate attention. Their statutory practical methods can permit retroactive application from the beginning of the calendar year when the conditions are satisfied. Changes in working patterns, employment or travel distance can require recalculation. The September position should not be read as a blanket ban on every retroactive allowance.
What is the company really correcting?
Return to the founder preparing the December payment. The useful question is not whether €50 feels fair. It is this: are we correcting evidenced past costs, establishing a future employment policy, or postponing a payroll decision whose tax and cash consequences will surface later?
That answer should be visible in the decision date, the employee entitlement, the cost evidence, the payroll treatment and the ledger. A historical reimbursement needs historical support. A future fixed allowance needs an advance cost basis. A WKR choice needs available space and timely designation.
I read this position as a reminder that decent employment practice and tax discipline should not be separated. Employees should not routinely finance business costs from their own pockets. Employers also need to know what they are promising before payroll converts that promise into money.
The Dutch instinct to solve a practical problem quickly is often useful. Here, speed works only when the company names the payment correctly. Goodwill can justify the decision to compensate people. It cannot rewrite when the costs arose.
Before approving a catch-up allowance, confirm the evidence, entitlement, payroll treatment and available WKR capacity.
The data, sourcing, and analysis behind this article were conducted by Linda Pavan Geraedts. AI was not used to identify sources, build the factual basis, or produce the analytical judgment contained here. AI was used only as a drafting aid. The final English text was personally reviewed, edited, and approved by Linda Pavan Geraedts before publication.
References
- KG:204:2026:17 Vaste vergoeding met terugwerkende kracht | Kennisgroepen Belastingdienst
- Belastingdienst - Current payroll administration conditions for fixed allowances
- Belastingdienst - WKR free space and the cash cost of a failed exemption
- Kennisgroepen Belastingdienst - Statutory exceptions for fixed travel and home-working allowances
- Kennisgroepen Belastingdienst - Comparable employee groups and outsourced labour
- Rechtspraak - Historical legal line against retrofitting the basis of a fixed allowance
- Belastingdienst - Handboek Loonheffingen
- Hoge Raad, 7 March 2008, ECLI:NL:HR:2008:AB7763
