Tax-Free Employee Gifts in the Netherlands: The 2% WKR Rule (2026)

Last updated: September 2026

Every other country in this series hands you a per-gift or per-person limit. The Netherlands hands you a budget. Germany allows €50 a month per employee. France allows €200 per qualifying event. Ireland allows €1,500 a year across five benefits. The UK allows £50 per trivial benefit, and the US allows nothing. In each of those systems the question is "how much can this person receive?". In the Netherlands the question is "how much has the company spent this year, in total, on everything it designated?"

That difference changes how a rewards programme should be run. A Dutch employer can give one person a €1,000 anniversary gift and another nothing, can hand out gift cards every month, and does not need an occasion — but the gift cards are competing for the same pot as the Christmas hamper, the team outing, the gym subscription and every other untaxed extra the company provides. Run out of pot in November and December's gifts cost 80% more.

This guide sets out the 2026 rules in English, with the Dutch terms your salarisadministrateur and accountant will use. It is written for HR, People Ops and finance teams with Dutch payroll. The figures are taken from the Belastingdienst's own Handboek Loonheffingen 2026 wherever that handbook states them. It is general information, not tax advice — confirm your treatment before changing payroll practice.

How the free space works

The WKR starts from a blunt premise: everything you give an employee because of their job is wage. Gifts are no exception — the Handboek says in terms that gifts belong to the employee's wage whatever kind of gift it is, and that you may instead choose to designate their value as eindheffingsloon, final-levy wage. Designation moves the item off the employee's payslip and onto the employer's WKR account.

Every designated item then counts against the free space. For 2026 the Belastingdienst sets it as a two-band calculation on the total fiscal wage of all employees — the combined figure in column 14 of the payroll record (kolom 14 van de loonstaat):

A few mechanical rules that are easy to get wrong:

• It is one budget per employer, not per employee. The Handboek is explicit that you do not need to administer designated items at employee level, and that you may make a different choice for each employee.
• It is one budget per payroll number. If your wage tax number has several sub-numbers (L01, L02), the fiscal wage of all of them is added together and the WKR applies to them jointly.
• Unused space is lost. It does not carry forward into the next calendar year.
• A mid-year start does not get annualised. An employer that begins payroll part-way through the year may not gross its fiscal wage up to a full year to enlarge the budget.

The rate moves almost every year

Unlike France, where the gift threshold drifts automatically with a social security ceiling, the Dutch percentage is set politically — and it has been changed repeatedly, including two separate years at 3%:

What the budget is worth per employee

Because the 2% band is capped at €400,000 of payroll, the free space per head falls as a company grows and converges on 1.18% of salary. Here it is worked through at a €50,000 average fiscal wage — our calculation from the 2026 rates, not a published table:

Two things follow. First, past about 50 employees the per-head budget barely moves: it falls €98.80 between 1 and 50 staff at this salary, then only €62.32 more between 50 and 1,000. For planning purposes a mid-sized or large Dutch employer can treat the free space as roughly 1.2% of salary per head.

Second, €600 a year is less than it sounds once everything else is in it. A 100-person company that gives every employee a €150 Christmas gift card has already used €15,000 — 24% of its €62,280 free space — before anyone has booked a team dinner, a leaving gift, a gym reimbursement or a festive hamper. In the Netherlands the rewards programme and the rest of the benefits budget are the same budget, and whoever spends it first wins.

Gift cards and the €25 rule they can never use

Search for Dutch employee gift rules in English and you will quickly meet a figure of €25. It exists, but it is not part of the free space, and it does not apply to gift cards.

The kleine geschenkenregeling — the small-gifts rule — treats a small personal gesture as not being wage at all, so it never touches the free space. It requires all three of the following:

• A personal attention given in circumstances in which others would also receive one — a bunch of flowers for an illness, a bottle of wine for a birth.
• No money and no voucher. The condition is literally that the employer gives geen geld of een waardebon — no cash and no value voucher.
• An invoice value of at most €25, including VAT.

The second condition is the one that matters here. A gift card is a waardebon, and Dutch payroll commentators who put the question of experience vouchers to the Belastingdienst were told there was no reason to treat a voucher as anything else. A €20 gift card is therefore not a small gift, while a €20 bouquet is. The gift card has to be designated and charged to the free space like any other benefit.

What about cash?

Dutch practice lets you charge a modest cash bonus — a small kerstbonus, say — to the free space as well, provided it passes the customary test described below; Grant Thornton's WKR guidance puts it plainly that a cash Christmas bonus goes into the free space. Some commentary is more cautious about cash than about gifts in kind, and a large or recurring cash payment that looks like salary is the item most likely to fail the customary test. If you are going to lean on the free space, gift cards are the safer instrument than bank transfers.

Over the budget: the 80% levy is cheaper than it looks

When designated items exceed the free space, the employer pays wage tax on the excess in the form of an 80% final levy (eindheffing). The Handboek adds a detail that most summaries leave out: no employee insurance premiums, no national insurance premiums and no Zvw employer levy are due on top of it. The employee pays nothing and sees nothing on their payslip.

An 80% levy is not an 80% tax rate. It is a gross-up: tax charged on top of a net amount. Solving for the rate that produces the same cost, 80% on top is equivalent to a 44.4% tax rate on a grossed-up payment (€180 gross, €80 tax, €100 net). So the comparison that matters is not "free versus 80%" but "80% levy versus paying the reward as ordinary salary". For well-paid staff, the levy wins:

The arithmetic behind the bottom two rows: in 2026 the top income tax rate of 49.50% starts at €78,426, the maximum wage for employee insurance premiums and the Zvw levy is €79,409 (so above it the employer pays no premiums on an extra euro), and the labour tax credit (arbeidskorting) is withdrawn at 6.51% per euro between €45,592 and €132,921. Grossing €100 up at 49.50% gives €198.02; at 56.01% it gives €227.32. Any other credit still being withdrawn in that range only pushes the cash cost higher, which is why the second figure is a floor.

Designation: the step that decides everything

None of the above happens automatically. An item only uses the free space if the employer designates it as final-levy wage, and the Handboek is strict about when:

• No later than the moment you give it. You do not have to decide at the start of the year, and you do not have to notify the Belastingdienst — but the choice must exist by the time the employee receives the benefit.
• It is informal but must be visible. There is no prescribed form; the choice shows from your administration, for example by booking the item as eindheffingsloon werkkostenregeling. A short designation document kept on file is common practice and costs nothing.
• It is final. Once made, a choice cannot be changed retroactively. The single exception is a genuine administrative error — booking something as final-levy wage when you had agreed with the employee that it would be salary — which you correct in the return and the records.
• No choice means salary. If you make no choice, the item is the employee's wage.
• Receipts are not required. The employee does not need to have incurred any cost, and you do not need to collect proofs of payment from them.

The customary test and the €2,400 safe harbour

A designated item must also be customary — the gebruikelijkheidstoets. The Handboek's test is that an allowance or benefit may not deviate by more than 30% from what is customary in comparable circumstances; the part above that 30% limit is the employee's wage. The burden of proving that something is not customary rests with the Belastingdienst.

To make the test workable, the Belastingdienst applies a safe harbour: designated allowances and benefits of up to €2,400 per employee per year are treated as customary in any case. Items that fall under a targeted exemption or a nil valuation do not count toward that €2,400.

Our observation from the numbers: the safe harbour is almost never what limits a broad programme — the free space is. €2,400 is 4.8% of a €50,000 salary, and 3.9 times the €622.80 per head that a 100-person company actually has to spend. Where the €2,400 does bite is concentration: a €3,000 retention gift to one engineer, or a manager's habit of sending the same few people much larger rewards than everyone else.

When the levy is paid

The WKR is settled once a year. Any final levy on the excess over the free space is declared and paid with the payroll tax return for the second return period of the following calendar year. For a monthly filer, the levy for 2026 is due with the February 2027 return. You may declare it earlier — in the last return of the year, or on account during the year, correcting any over- or underpayment by the same February deadline. If your withholding obligation ends during the year, the levy goes in the return for that final period instead. If you stayed inside the free space, there is nothing to declare.

Groups of companies: the concern scheme

Groups in which a parent holds at least 95% of the subsidiaries may apply the concernregeling and calculate one free space for the whole group, pooling the fiscal payrolls and all the designated items. The entity with the highest fiscal payroll pays any levy. The catch is spelled out in the Handboek: the 2% first band may only be applied once, to the group total — not once per company.

Whether that helps depends entirely on where the spending sits. The Handboek's own example makes the point better than it states it. We have run its numbers both ways:

The concern has €1,025 less free space than the three companies added together, and still saves the full €1,500 — because separately, C's €3,000 of unused space is simply lost. The reverse case is just as clear: two sister companies with €400,000 of payroll each have €16,000 of free space separately but only €12,720 as a concern, a loss of €3,280 or 20.5%. The rule of thumb is to pool when spending is uneven between entities and to stay separate when every entity is already using its own first band.

Rewards that do not touch the free space

Some benefits are wage but carry a targeted exemption (gerichte vrijstelling) and cost nothing from the budget. Two of them are directly relevant to recognition — and both are on the list of things that may change for 2027.

The jubilee exemption is the one to act on. A 25- or 40-year service award worth a month's salary is the largest single tax-free recognition payment the Dutch system allows, and it sits outside the free space entirely. If it is abolished from 2027 without a transitional rule, employees reaching those milestones in early 2027 lose it. For how service milestones fit into a wider programme, see our guide to work anniversary and milestone rewards.

A separate test for VAT: the €227 threshold

Wage tax and VAT are assessed independently, and a gift can be tax-free for payroll purposes while still costing you VAT. Under the Besluit uitsluiting aftrek omzetbelasting (BUA), you cannot deduct input VAT on staff gifts and provisions once their total for one recipient exceeds €227 excluding VAT per financial year — and when it does, the VAT on all of those expenses for that person becomes non-deductible, not just the part above the threshold.

In practice this bites on Christmas hampers and gifts in kind, where you paid VAT on the purchase. Most multi-brand gift cards are multi-purpose vouchers under EU voucher rules, which carry no VAT when they are sold — VAT is charged only when the card is spent — so there is usually no input VAT on them to lose. A single-brand card for goods at one known VAT rate is a single-purpose voucher and is taxed at issue, so check which kind you are buying.

2027: what is law and what is being weighed

Prinsjesdag — the presentation of the Dutch budget and the Tax Plan — falls on 15 September 2026. Keep two categories apart: what is already legislated, and what has been reported as under consideration.

The measure that matters most for gift budgets is the first band, and its effect is lopsided. We modelled the 2027 free space three ways:

Scrapping the first band would cost every employer the same maximum €3,280 — but that is 41% of a small employer's budget and about 5% of a 100-person company's, a hit almost eight times harder in proportion for the smallest firms. If you run a small Dutch entity and plan to spend most of your free space on year-end gifts, check the Tax Plan 2027 documents published on 15 September before committing to 2027 values, and consider whether gifts planned for early 2027 are better given in December 2026, inside a budget you know.

The Netherlands against Germany, France, Ireland and the UK

The last row is where the Dutch system is genuinely unusual. Everywhere else in this series the limit is a cliff edge: exceed it and the whole gift becomes taxable. In the Netherlands only the excess is charged, only to the employer, and the charge is a known 80%. That makes the Dutch rules the easiest in Europe to budget for and the easiest to overspend by accident, because nothing happens at the moment you cross the line — the bill arrives with the February return. The design consequences for a multi-country programme are covered in our guide to rewarding remote teams across countries, and the budgeting side in the CFO rewards budget framework.

The WKR checklist for gift cards

• Calculate this year's free space from column 14. 2.00% of the first €400,000 of total fiscal wage plus 1.18% of the rest, across all sub-numbers of the payroll tax number.
• Designate every gift card when you send it. Book it as final-levy wage in the administration at the latest on the day it is given. A designation cannot be added later.
• Stop treating small cards as small gifts. The €25 rule excludes vouchers. Every card counts at its full invoice value including VAT.
• Keep one running total for the whole budget. Gift cards share the free space with hampers, outings and every other designated benefit — someone has to own the combined number.
• Watch individual totals above €2,400. Past that, the customary test is live for that employee.
• Do not reroute senior staff's rewards through salary to dodge the 80% levy. Above a 44.4% marginal rate the levy is the cheaper route.
• Check the concern scheme each year if you have several Dutch entities. Pool when spending is uneven; stay separate when each entity already uses its own first band.
• Pull forward jubilee awards that are close. The 25- and 40-year exemption is reported to be under threat from 2027.
• Diary the February return. Any 2026 levy is due with the return for the second period of 2027.

Frequently asked questions

Sources

• Belastingdienst — Handboek Loonheffingen 2026 (March 2026), chapter 10 "Vrije ruimte en eindheffing werkkostenregeling berekenen": the 2.00% / 1.18% bands and the column 14 basis; the 80% levy with no employee insurance premiums or Zvw on top; the six steps; designation no later than the moment of giving, its finality and the audit treatment of undesignated items; the 30% customary test; the filing deadline in the second period of the following year; and the concern scheme, including the prohibition on applying the first band per entity and the worked example reproduced above. Section 4.7.2 on gifts as wage.
• Belastingdienst — Wat is de werkkostenregeling (WKR)?: free space percentages for 2025–2026, the loss of unused space at year-end, and the lists of targeted exemptions and nil valuations
• Business.gov.nl — Work-related costs scheme and KVK — End-of-year gift for your staff (edited 2 January 2026): the 2026 rates, the 80% levy, and the requirement to designate before giving
• Belastingdienst — Drempelbedrag personeelsvoorzieningen, giften en relatiegeschenken: the €227 excluding VAT BUA threshold per recipient per financial year
• Grant Thornton — WKR guidance: the €2,400 per employee per year safe harbour, the kleine geschenkenregeling conditions, and cash Christmas bonuses in the free space
• Salaris Vanmorgen, 7 October 2024 — Kleine geschenkenregeling: wordt voucher gezien als waardebon?: the three conditions, the €25 including VAT limit, and the Belastingdienst's view that a voucher is a waardebon
• Salaris Rendement — Wijzigingen in de vrije ruimte WKR: een overzicht: first-band rates 2021–2026 and the legislated 2.16% for 2027
• Salaris Rendement, 7 September 2026 — Plannen Prinsjesdag 2026 voor de loonheffingen: measures reported as under consideration for the Tax Plan 2027 (first band, 80% levy, €2,400 in law, jubilee exemption)
• Rijksoverheid, 12 June 2026 — Werkkostenregeling eenvoudiger met aanpassing belastingvrije personeelskorting: abolition of the 20% / €500 staff-discount exemption from 1 January 2027
• 2026 income tax and premium parameters: box 1 rates of 35.75% to €38,883, 37.56% to €78,426 and 49.50% above; maximum premium and Zvw contribution wage €79,409; arbeidskorting withdrawn at 6.51% between €45,592 and €132,921
• Jubilee exemption (diensttijdvrijstelling): once at 25 and once at 40 years of service, up to one month's fiscal wage from column 14, twice at 40 if unused at 25, outside the free space
• Council Directive (EU) 2016/1065 on the VAT treatment of single-purpose and multi-purpose vouchers

All figures verified against the sources above on 11 September 2026 and stated on 2026 rates. Per-head figures, the break-even rate, the concern comparison and the 2027 scenarios are our own calculations from those rates. Items marked as under consideration had not been published as legislation at the time of writing. This article is general information and not tax, legal or accounting advice — confirm your treatment with your accountant or payroll provider before changing payroll practice.