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The work-related costs scheme (WKR) and the free margin
Written by Ilias3 min read
If you have staff, you'll deal with the work-related costs scheme, WKR for short. With it you can give your employees untaxed allowances and provisions, such as a Christmas hamper or an allowance. But there's a limit. This article explains how the free margin works in 2026.
What is the work-related costs scheme?
The work-related costs scheme governs how you as an employer can give untaxed allowances and provisions to your staff. Think of a Christmas hamper, a company outing or an allowance. Up to a certain amount, the free margin, you don't have to pay payroll tax on this.
How large is the free margin in 2026?
In 2026 the free margin is 2% over the first 400,000 euros of your total wage bill. Over the part of the wage bill above 400,000 euros, 1.18% applies. If you stay within that margin with your allowances, you pay no extra levy.
What happens if you exceed the margin?
If you exceed the free margin, you pay a final levy of 80% over the excess. That's a steep rate, so it pays to keep your allowances within the free margin. So keep track during the year of how much margin you have left.
What falls outside the free margin?
Some allowances fall under targeted exemptions and cost no free margin, such as travel costs within the norm and certain study costs. The home-working allowance of 2.45 euros per day in 2026 is also targeted-exempt. It's wise to use these exemptions well before you use the free margin.
This article provides general information based on the rules known for 2026 and does not replace personal tax advice. For your specific situation, we're happy to take a look with you.
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