Are you looking for ways to optimally utilize the Work Cost Scheme (WKR) in 2025? In this blog, we dive into the Work Cost Scheme, an important tax scheme that is a central part of HR compensation policy. Additionally, we will discuss the Prinsjesdag updates and show how you as an employer can optimize the WKR. By setting this up properly, along with knowledge about targeted exemptions, nil valuations, and WKR tips and tricks, we help you manage your available WKR space smartly.

In the article, we will address:

• What is the Work Cost Scheme (WKR)?

• What is the free space in the WKR?

• What is the free space in 2025?

• What targeted exemptions are there?

• Employers and insights into the WKR free space

• How can you optimally utilize the free space?

• How can I as an employer optimally employ the WKR?

• What are the conditions for salary exchange?

• What are smart tips to optimally deploy the WKR?

• WKR & employment conditions Masterclass Alleo

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What is the Work Cost Scheme (WKR)?

Let's start with the basics: the Work Cost Scheme is a tax arrangement that allows employers to provide tax-free compensations and benefits to their employees. Instead of numerous separate arrangements, there has been a scheme that replaces this for several years. A certain percentage of your total wage bill is available as "free space." Within this free space, you can give your team tax-free extras. The higher the wage sum, the larger the free space.

Important components of the WKR

The Work Cost Scheme (WKR) consists of various important components that enable employers to provide compensations and benefits to employees without tax implications.

What are nil valuations?

Certain benefits that apply to provisions at the workplace itself are fiscally valued at €0, meaning they do not count against the free space and are therefore exempt from tax. Examples include:

• Use of company resources at the workplace (such as computers or phones).

• Meals at the workplace (e.g., fruit, cup of coffee).

• Parking spaces on the employer's premises.

What are targeted exemptions?

Targeted exemptions are intended for compensations and benefits with a business purpose outside the workplace. Because these costs contribute to work and are clearly business-related, you are allowed to reimburse them outside the free space. Examples include:

• Travel expense reimbursement (up to €0.23 per kilometer for commuting).

• Study and training costs.

• Safety equipment such as helmets or protective clothing.

As long as you meet the conditions set by the Tax Authorities, you will not pay income tax and no 80% final tax on these items. This makes targeted exemptions particularly attractive for employers.

What is the free space?

Compensations that do not fall under a targeted exemption or nil valuation are deducted from the free space if you want to give them tax-free to your employees. The free space is the part of the wage bill that you can use as an employer per year tax-free for compensations, benefits, and provisions to employees. Within this budget, you do not need to pay income tax.

What is the WKR free space in 2025?

The WKR free space for 2025 is somewhat more favorable than expected. Initially, it seemed that the percentages would remain the same as in 2024, but it is now known that the free space will increase from 1.92% to 2% on the first €400,000 of the fiscal wage sum.

For 2025, the following percentages apply:

• Up to a fiscal wage bill of €400,000: 2%

• Above the fiscal wage bill of €400,000: 1.18%

This means that, depending on the total fiscal wage sum, you can spend a certain amount tax-free on rewards and compensations. It is now easier to plan ahead since the percentage is clear, as long as your workforce and wages remain roughly the same.

Note: when you exceed the free space, you will pay a final tax of 80% on the amount by which you exceed.

This change provides more room to provide tax-free compensations, especially for companies with a wage bill around or below €400,000.

In the WKR Guide 2025, you will find an extensive explanation on how to smartly apply the WKR in the new year.

How can you optimally utilize the free space?

By already calculating how much space you have, you can prevent having to pay taxes at the end of the year on compensations that otherwise could have been tax-free.

How can I as an employer optimally employ the WKR?

More and more employers want to distribute the available space more fairly among their diverse teams. One way is through a budget contribution for vitality, for example, between 15 and 50 euros per month, which the employee can use to engage in sports or other purposes.

A second way is to give employees access to the free space, where the employee exchanges tax-friendly but pays for the employment conditions themselves. The value is exchanged within the WKR, so neither the employee nor the employer pays tax on this amount. This can yield savings of 40%. For the employer, this can even save 18% on social charges, as this is exchanged within the WKR.

• Create more purchasing power

• Savings on social charges

What are the conditions for salary exchange?

Although salary exchange can be an attractive option, there are also several things to consider:

• Impact on allowances and bases: when employees reduce their salary through exchange, it may affect their entitlement to allowances.

• Frames and spending goals: determine together with your employees what the best utilization is for the free space, for example, vitality or sustainability.

A solid policy on this is therefore very important.

What are tips to optimally deploy the WKR?

There are many ways to smartly use the WKR without completely depleting your free space. We have lined up some options for you:

• Birthday gifts: use the small gifts scheme to give nice tokens without this costing the free space.

• Lunch provisions: ask for a small contribution from your employees so that the rest can be classified as a tax-free exemption.

• Sale of above-statutory leave: give your employees the option to buy or sell vacation days outside the WKR for more flexibility.

• Team outings: establish a staff association, have employees make a small monthly contribution, and double it as an employer tax-free. This way, more space remains in the WKR for other matters.

• Bicycle scheme: consider offering a lease bicycle scheme that your team can use for commuting, outside the WKR.

Curious about more WKR tips & tricks? Read in the WKR Guide 2025 how to optimally utilize the free space in the Work Cost Scheme to provide your team with an attractive benefits package.

How do you prevent your free space from being unnecessarily taxed?

It is a shame to place compensations in the free space while they might fall under targeted exemptions. Think of things like company fitness: if this is part of your health and safety plan, it can be provided tax-free. Make sure you are well-informed about which expenses fall under the WKR and which do not, so you can optimally take advantage of the tax benefits.

More WKR tips & tricks?

The WKR offers plenty of opportunities to provide tax-efficient compensations to your employees. Whether you choose a vitality budget, salary exchange, or tax-free compensations such as bicycle leasing, by planning well and optimally utilizing the space, you can save significantly.


👨💻 Check here a convenient masterclass where we discuss together with BDO Netherlands how to optimally implement the WKR for secondary employment conditions.

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