Increase of untaxed travel allowance possibly before 2024
08/04/22
The Lower House passed a motion on 5 April asking the government to bring the intended increase of the untaxed travel allowance forward to 2023. Prior to this, State Secretary Van Rij had already indicated that it was being investigated whether the untaxed travel allowance could be increased as of 1 July 2022. This would mean that employers will be able to provide an untaxed travel allowance to their employees of 23 cents per kilometer, instead of the current 19 cents per kilometer.
In the coalition agreement of 15 December 2021, it was agreed - among other things - that the untaxed travel allowance would be increased as of 1 January 2024. Currently an employer can provide an untaxed allowance of up to 19 cents per kilometer to an employee. Due to the rising energy prices, the House of Representatives wants to introduce the increase of the untaxed travel allowance earlier than 2024.
Prior to this, the State Secretary Van Rij mentioned in a written response of 21 March that introducing this increase is not (yet) feasible due to reasons relating to the technical implementation thereof. In a debate at that time, however, he already indicated that he will look into the possibility of introducing the higher untaxed travel allowance at an earlier date. He mentioned that it should be possible to implement the increase as of 1 July 2022. How the related costs - estimated at approximately 260 million - will be covered is still unclear however.
In addition, a motion was passed by the House of Representatives regarding the untaxed travel allowance. This motion urges the government to bring the increase of the untaxed travel allowance forward to 2023 instead of 2024. Although the funding is still not in place, the House of Representatives has stated that the proceeds from the earlier abolition of the ‘jubelton’ (tax free gift for the acquisition of a house) can in any case be used. On the basis of this motion, the State Secretary will have time up until the Dutch Budget Day in September to research how this measure will be funded.
What does this mean for you?
If the increase of the untaxed travel allowance is indeed brought forward, you could possibly take advantage of this as of 1 January 2023 and offer your employees a more extensive untaxed travel allowance. Your employees will then receive 23 cents per kilometer. Since this regards a so-called targeted exemption, this increase will not be at the expense of the discretionary scope within the work-related costs scheme (WKR).
In case the intended increase does not take place per 1 January 2023 and you would like to accommodate your employees in the context of increased travel costs, it may be possible to reimburse the excess (above the 19 cents per kilometer) as part of the discretionary scope of the WKR. Your employee will then not have to pay additional wage tax on this reimbursement. Please note: if the discretionary scope is exceeded, you as an employer will have to pay 80 per cent final levy. Please contact your PwC advisor if you have any questions.
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