Increase in tax-free travel allowance
The Dutch government has increased the maximum tax-free travel allowance with retroactive effect from 1 January 2026, from € 0.23 to € 0.25 per kilometre.
This measure forms part of a package of tax measures intended to compensate for increased energy costs. The increase has already been given effect through an approval decree, allowing employers to apply the higher amount before the measure is formally incorporated into legislation. The decree also explicitly approves giving effect to the increase in the payroll tax return by filing correction reports.
A higher kilometre allowance will, of course, increase costs for employers. It is therefore expected that not every employer will be willing or able to implement the increase.
However, employers may be able to use the increased travel allowance on a cost-neutral basis. This can be done through a so-called salary sacrifice arrangement. In that case, the employee receives the higher net travel allowance in exchange for a corresponding reduction in gross remuneration, such as salary, holiday allowance, bonus or other remuneration components. If structured properly, a salary sacrifice arrangement can allow the employee to receive a substantial part of the benefit on a net basis, without additional cost for the employer.
Abolition of the tax-free employee discount
Employers that sell products from their own business to employees at a discount should be aware of an important adverse change. As part of the funding for the support package referred to above, the abolition of the specific exemption for employee discounts has been announced.
This abolition is expected to be included in the 2027 Tax Plan and would take effect on 1 January 2027. The 2027 Tax Plan will be debated later this year in the House of Representatives and the Senate. Accordingly, the tax change is not yet final.
In certain sectors, the impact of abolishing this tax facility could be significant. Under the current specific exemption for employee discounts, employers may, subject to conditions, grant a 20% employee discount without tax consequences. For sectors such as retail, hotels, cinemas and amusement parks, employee discounts can be an important employment benefit for attracting and retaining staff. The exemption plays an important role in keeping this benefit tax-efficient and affordable.
For employers affected by this proposed change in legislation, we advise closely monitoring developments. If the legislation passes, such employers may wish to review which alternative tax-efficient benefits are available to them under the work-related expenses scheme. We would of course be happy to assist with such a review.
