Even though your employees are working from home during the pandemic, until April 1, 2021 your organization is allowed to continue paying an untaxed fixed travel allowance to these employees under certain conditions. Thereafter, the arrangements which regulate this continuation will be revoked. That will of course have a financial impact on your organization as well as your employees. But what exactly will be the impact?
If employees make the same commute to work and back every day, it is rather unpractical to have them claim the costs for each commute separately. Most employers will therefore opt to pay their employees a fixed travel allowance instead.
Continue paying a fixed travel allowance during the pandemic
The state secretary of Finance has approved a regulation which permits organizations to regard days on which employees worked from home as days those employees commuted to work for the duration of the pandemic. This means you can continue to pay employees who are working from home a fixed travel allowance and that this allowance is still untaxed.
The continuation of the allowance is subject to the condition that the employee in question had to be unconditionally eligible for an untaxed fixed travel allowance on or before March 12, 2020. This is usually the case for periodic allowances.
However, if your organization uses the so-called ‘cafetariamodel’, in which employees can opt to exchange a taxable payroll item – such as an end-of-year bonus – for a higher untaxed fixed travel allowance, then the employees must have notified the employer of their choice at the latest on March 12, 2020 in order to have the increase in allowance not subject to taxation. If they have instead waited until the end of the year to notify the employer of their choice to have the end-of-year bonus exchanged for a higher fixed travel allowance, then only the portion of the increase which applies to days on which the employee actually commuted to work will be untaxed.
The regulation was initially scheduled for 2020 only. But because of the new lockdown which started in December, it has now been extended until April 1, 2021.
Calculating the fixed travel allowance
For the calculation of the amount of allowance, you must assume the employee has 214 workdays in one year. A calendar year has more days of course, but the aforementioned number already allows for the absence of the employee due to vacation, sickness or leave.
The number of workdays is then multiplied by the number of kilometers in an employee’s daily commute to work and back. This will give you the number of kilometers an employee commutes annually. This is then multiplied by the untaxed travel allowance of max. € 0.19 per kilometer. In order to calculate the monthly or weekly fixed travel allowance, you must then divide the answer by 12.
The above calculation can only be applied if the employee in question commutes to work and back at least 36 weeks per year. Make sure to adjust the calculation appropriately for employees who commute to work and back only a few days a week, for instance because they work part-time.
Continuation of fixed travel allowance is not mandatory
There is no legal obligation for your organization to continue paying a fixed travel allowance to employees who do not incur commuting expenses. If an employee (partially) works from home or stays home due to sickness for a long period of time, it is more than fair to (partially) stop the payment of the allowance. The continuation is only mandatory if the terms of employment, the employee manual, the contract or the collective labor agreement stipulates that employees who are absent must continue to receive a fixed travel allowance.
If not mentioned otherwise, it suffices to notify employees in writing that the payment of their fixed travel allowance will be stopped. It is recommend to give an explanation for why this happens, for example because of necessary cost savings.
Two options for untaxed reimbursement
After the current regulation is revoked on April 1, 2021, there are still two options for your organization to continue the untaxed reimbursement of commuting expenses for employees working from home.
The first option is to accurately establish the new commuting habits of your employees. This means that you must find out per employee whether (s)he still meets the commuting criterion of 36 weeks or 128 days per year in order to be eligible for an untaxed travel allowance. The second option is to simply reimburse the expenses for each day an employee actually commuted to work.
Difficult to determine the commuting days in 2021
Reimbursing the expenses for each day an employee actually commutes to work seems to be the best option. There are a few reasons for this:
- It will prove to be difficult to precisely determine the number of days an employee will commute to work and back in 2021. The circumstances around the coronavirus as well as the obligation (or wish) to work from home are constantly changing. This means you will have to use assumptions instead of facts. And if those assumptions turn out to be incorrect, your organization may have to pay additional payroll tax and will be burdened with unnecessary additional administration.
- Reimbursing the expenses of actual commuting is a more flexible option than to pay a fixed allowance based on assumptions.
- Reimbursing the expenses of actual commuting can easily be combined with other reimbursements, such as one for the use of public transport or the use of a (lease) bicycle. Moreover, it will also be easier to tag on an untaxed homeworking allowance.
Register using software
Reimbursing the expenses of commuting to work can easily be arranged administratively by using software or apps, which will allow you to directly determine when and how much reimbursement is due. Through an online system, employees themselves can register when they commuted to work. This information is then automatically sent to the payroll administration, where it can be processed and included on the payroll of the respective employee.
An alternative is to have employees claim the expenses of commuting by filling out a claim form. This works best for the reimbursement of occasional commuting.
Limiting the financial risks
The aforementioned proves how important it is to have made arrangement which are flexible but at the same time also limit the financial risks for you as well as your employees.
Compensation for coffee
This year, many employers decided to continue paying a fixed travel allowance as compensation for the additional costs incurred as a result of working from home, for instance on coffee, electricity and, not to forget, toilet paper. Some had already started paying a special homeworking allowance for this. However, this homeworking allowance is not mandatory unless stipulated so in the collective labor agreement, as is the case for governmental jobs. Nibud, the Netherlands National Institute for Budgetary Advice, calculated that a day worked from home costs on average € 2 more per person.