Staff discount tax break scrapped: Dutch sector dismayed

The Dutch tax-free staff discount will disappear as a separate exemption on 1 January 2027. An amendment to keep it was voted down in the Tweede Kamer, the lower house, on Thursday evening, to the dismay of 25 trade associations including Koninklijke Horeca Nederland (KHN).

The amendment was an attempt to remove the measure from the 2027 Tax Plan at the last minute. The trade bodies, from retail, travel, culture, hospitality and services, speak of "a big hangover" for hundreds of thousands of employees and their employers, according to Dutch news agency ANP.

What changes for the staff discount

What used to sit beside the costs scheme must come out of the same free allowance from 2027.

At present an employer may give staff up to 20 percent off products from its own sector, per purchase, up to a maximum of €500 per employee per year, without wage tax. In hospitality that means a discount on food, drinks or a night's stay at the employee's own venue or chain. From 2027 that discount counts as wages unless the employer places it in the free allowance of the work-related costs scheme (WKR). Anything above that allowance is subject to an 80 percent final levy.

The free allowance does go up on the first €400,000 of the wage bill, from 2 to 2.16 percent; above that it stays at 1.18 percent. For a restaurant with a wage bill of €300,000 that comes to €6,480 a year, which also has to cover Christmas hampers, staff outings and other tax-free allowances. After the budget day plans, KHN wrote that the increase is "less generous than it seems at first sight".

Government wants a simpler costs scheme

With the abolition, the cabinet follows an evaluation of the WKR by SEO Economic Research, which found that the separate exemption no longer serves a current social purpose. The cabinet wants to make the scheme simpler. The proposal to scrap the exemption actually came from the Tweede Kamer itself, as a way to fund the energy package, Accountancy Vanmorgen reported.

Opposition was broad. In early October KHN said it was campaigning against the plan with INretail, Thuiswinkel.org, MKB-Nederland and more than twenty other organisations. This week the coalition handed more than 33,000 signatures to parliament. According to INretail, the amendment was voted down "like many others".

The sector has not given up. "We will keep talking to politicians and the cabinet to find a solution," the trade associations said. The Tax Plan still has to pass the Eerste Kamer, the senate, which has yet to vote on it. For hospitality employers, the end of the staff discount adds to another change coming in 2027, the new Dutch hospitality hygiene code. Anyone with the staff discount written into a collective agreement or their own employment terms would do well to calculate now how much free allowance will be left.