Employee expenses need classification before a convenient payroll code turns them into a monthly habit.
An employee pays for fuel in a company car, buys a bottle of wine for a client and submits both receipts on Friday. The founder approves them between two meetings. By Monday, payroll has booked both amounts under the familiar heading of expenses. Nothing appears unusual.
Yet this ordinary scene carries a decision that reaches beyond two small receipts. The March 2026 Handboek Loonheffingen describes intermediary costs as amounts an employee advances on the employer’s instruction and for the employer’s account. Repayment of a genuine employer cost is not wage and may be made untaxed.
The important word is not business. It is employer.
Classification comes before the WKR
Many small employers begin with the work-related costs scheme, or WKR. They ask whether an expense is exempt, taxable or chargeable to the free space. That question comes one step too early.
First establish whether the employee paid an obligation that belonged to the employer. An employer-ordered notebook, fuel for a company car, office supplies and a client gift can qualify when the employee advanced the company’s cost. Reimbursement then sits outside wage and does not use WKR free space.
When the obligation belonged to the employee, the analysis changes. A work connection does not by itself turn a personal purchase into an employer cost. The payment may be wage. The employer then considers a targeted exemption, a nil valuation, ordinary wage or designation as final levy wage.
This is more than tax technique. It tests whether the company understands what it bought, who owed the supplier and what the employee received. A receipt records a payment. The company still needs to understand the payment route behind it.
That distinction matters when one payroll code handles everything. The code may make administration faster while mixing employer costs with employee remuneration. By year-end, that convenience becomes harder to untangle.
Monthly convenience needs current evidence
Fixed expense allowances look efficient because they remove small claims from the monthly routine. They also replace individual receipts with a continuing claim that the allowance still reflects real costs.
The Belastingdienst requires a new fixed untaxed allowance to have a clear composition and prior study of actual costs. The employer must identify the relevant cost categories and substantiate the amounts. The company must revisit that study when circumstances change or when the Belastingdienst requests it. An untaxed fixed allowance cannot be created retrospectively.
Consider a service company that introduced a monthly allowance when consultants travelled to clients five days a week. Two years later, some staff work from home, others use company cars and several have moved into different roles. Payroll continues to pay the same amount because nobody has returned to the original calculation.
The issue is not whether the allowance appears generous. Its basis may no longer describe the work. If the conditions for untaxed treatment are no longer met, the amount is wage. Subject to the applicable conditions, the employer may designate it as final levy wage and use WKR free space.
For 2026, that free space is 2.00 per cent of fiscal wages up to and including €400,000, and 1.18 per cent above that threshold. An 80 per cent final levy applies to the excess. A modest monthly habit can therefore create a larger year-end consequence.
Who owed the money?
The legal payment obligation often settles the issue. In a 2026 Belastingdienst position on meals paid through a payment card, the payments were wage where the employee owed the meal price. The employee had not ordered the meal on the employer’s instruction and for the employer’s account.
The payment route deserves as much attention as the receipt. Direct payment by an employer does not make an employee’s own obligation an employer liability. Equally, use of a private card does not prevent a genuine employer purchase from qualifying as an intermediary cost.
Company-car charging shows how quickly a familiar expense can become detailed. The Belastingdienst accepts reimbursement of actual charging costs for an electric company car as intermediary costs. Actual home-charging costs, however, may depend on the energy contract, fixed charges, private use, solar generation and credits.
A convenient average rate may help internal administration, but it must still fit the employee’s actual cost. Records need to support the amount paid, especially where energy arrangements differ between employees.
Staffing companies face a similar boundary. An agency cannot automatically adopt a fixed-cost arrangement agreed for a client’s own employees. As legal employer, the agency must support equivalent work, equivalent cost circumstances and compliance with the arrangement’s conditions. The same workplace and job title do not settle that question.
A better story in the books
For a small employer, this does not require a grand payroll project. Begin with a sample of recent reimbursements and one direct question: what happened here?
The records should connect the employer’s instruction, the supplier, the business purpose, the legal payer, the actual amount and the final use. Fixed allowances deserve a separate review of their calculation, employee group, approval date and latest reassessment.
The payroll provider should also be able to explain how it separates intermediary costs, targeted exemptions and designated WKR wage. That is a basic control question, not an attempt to turn every receipt into a compliance event.
Return to the employee with the fuel receipt and the client gift. Both payments may be entirely proper. Approval should rest on more than a manager recognising the purchase as work-related. The company should be able to see that these were its own costs, temporarily paid by someone else.
That is the calm discipline behind expense reimbursement. Small receipts do not need heavy procedures. They need an honest payment route and records that preserve it.
Make that distinction before payroll. Year-end WKR work becomes clearer, the ledger tells a more reliable story and convenience does not quietly outrun control.
Review the payment obligation behind your expense reimbursements before payroll treatment becomes routine.
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
- Intermediaire kosten: wat valt hier wel en niet onder? · Salaris Vanmorgen
- Belastingdienst - Core definition of intermediary costs
- Belastingdienst - WKR is not the first test
- Belastingdienst Kennisgroepen - In-house arrangements cannot simply be copied to agency workers
- Belastingdienst Kennisgroepen - The legal payment obligation determines the boundary
- Belastingdienst Kennisgroepen - Current example: actual costs of charging a company car
- Belastingdienst Kennisgroepen - Reimbursement of company-car charging costs
