Expert Group opinion published on own-company products

Some employers offer employees discount on products from the company’s own range. Sometimes this is done directly and sometimes through special outlets or web shops for personnel. A recent publication by the Payroll Tax Expert Group now clarifies the matter of whether the specific exemption for own-industry products applies to such an allowance.

In the situation presented by the Expert Group, employees could buy products in a physical shop or web shop that was only open to current personnel, former personnel and the employees of partner companies. The shops sold only products manufactured by the employer. The shops, however, are not part of the employer’s business and the employer also has no direct or indirect interest in them. The shops purchase the products from the employer and then sell them at their own risk and expense.

Employees buying something from these shops received a 20% discount on the purchase price from the employer. The question was: does this allowance fall under the specific exemption for own-industry products? Because the sale takes place through a third party and the goods are not actually bought from the employer or a company directly connected with the employer, the specific exemption does not apply. The allowance therefore constitutes salary, unless the employer allocates this to the tax-free WKR budget.

This position shows that the Tax and Customs Administration applies a strict interpretation of this exemption.

• the product has to come from the employer (or an affiliated company) and
• the employee must purchase the product from that employer (or affiliated company).

If the purchase and sale are made through an independent third party - even if this party only sells the employer’s products - the discount does not qualify as a specific exemption.