How do you calculate the free space?

The free space is recalculated annually. For example, in 2023, the free space was 3.0% on the first €400,000 of your taxable payroll and 1.18% on the surplus. For 2024, this is 1.92% on the first €400,000 of your taxable payroll and 1.18% on the surplus, etc.

If the free space is exceeded, as an employer, you will pay 80% tax on the surplus. If a salary split applies to the salary of your employee(s), you may pay too much final taxation when the free space is exceeded.

The due final taxation when applying a salary split

Initially, you calculate the free space and the due final taxation as if the total taxable payroll is subject to Dutch taxation. Then you choose one of the following methods:

The collective method:

Total taxable payroll of all employees not taxed in the Netherlands

Total taxable payroll of all employees

X Due final taxation = Due final taxation

The individual method:

The reimbursements, provisions, and allocations attributable to work with income not taxed in the Netherlands

The total amount of reimbursements, provisions, and allocations of all employees

X Due final taxation = Due final taxation

The disadvantage of the latter method is that you have to keep track of the reimbursements, provisions, and allocations per employee with taxed income abroad.

More information?

Do you wish to receive more information or guidance on the work-related expenses scheme in an international context? Please contact Clea Cremers, global mobility specialist - tax, on telephone number +31(0)77-3217715 or send her an e-mail.