Guide to work-related costs scheme corporate rule expanded

Any final levy due under the work-related costs scheme for the 2024 calendar year must be included in the payroll tax return for February 2025 at the latest. The tax-free budget and the final levy for the work-related costs scheme is calculated per employer responsible for tax withholding. If an employer forms part of a corporate entity then the "group rule" may be applied. If a group of employers opt for the corporate rule the tax-free budget and the final levy may be calculated at corporate level. The tax authorities had previously published a guide on how the corporate rule can be applied. 

This Guide to the work-related costs scheme corporate rule has now been augmented with information about salary from past employment and the calculation of the tax-free budget. If one or more group members pays salary from past employment, the "10% criterion" must be taken into account in the calculation of the tax-free budget. 

This means that if the salary from past employment amounts to 10% or less of the total taxable salary, the tax-free budget will be calculated on the basis of the total taxable salary, i.e. including the salary from past employment. If the salary from past employment amounts to more than 10% of the total taxable salary, then the tax-free budget must be calculated on the basis of the total taxable salary from current employment only. 

When applying the corporate rule, the Guide states that this can be done in two ways:

  1. Does the salary from past employment of the entire group amount to 10% or less of the total taxable salary of the group? Then the tax-free budget will be calculated on the basis of the total taxable salary, i.e. including the salary from past employment. If it amounts to more than 10%, then the tax-free budget will be calculated on the total taxable salary from current employment only. 
  2. Does the salary from past employment of a group member amount to 10% or less of the total taxable salary of the group member? Then the total taxable salary of this group member, including the salary from past employment, will be included in the calculation of the tax-free budget of the group. If it amounts to more than 10%, then the tax-free budget will be calculated on the total taxable salary from present employment only. 

Whichever method is used will apply to all members belonging to the group for the whole calendar year. A group may decide for itself which of the two methods to use.