Cabinet plans to scrap tax-free staff discounts from 1 January

The cabinet wants to scrap the special scheme for tax-free staff discounts on 1 January. Twenty-five trade organisations are now calling on politicians to keep it, and the trade union FNV also opposes scrapping it. The Tweede Kamer, the lower house of parliament, is debating the Belastingplan (tax plan), which contains the abolition, today.

Why it matters

• Today, firms can sell their own products or services to staff at up to 20% off, up to a total of €500 per employee a year, without it being taxed as wages.
• From 1 January that scheme would end. Discounts would then have to come out of the employer's tax-free space (vrije ruimte).
• Employers who exceed that space pay 80% tax on the excess.

The free space is 2% of the first €400,000 of total wages and 1.18% of the wage bill above that. Employers already use it for things like a Christmas hamper, a gift voucher or a sports subscription.

The trade organisations say: "Moving it into the free space is not a realistic solution." They say employers already use that space for staff outings, birthday gifts and Christmas gifts. They hope the plan is changed.

The FNV says wages should rise first. "In the shopping street, pay rises have lagged behind for years," it says. "But it is bitter that the very people whose wages lag behind now risk losing this extra too."

A research bureau commissioned by the Ministry of Finance concluded last year that the scheme serves no social purpose and can go, which would also simplify the tax system. This year the cabinet proposed measures to compensate citizens and businesses for high energy prices. A majority of the Tweede Kamer voted for abolition as one way to pay for them. It is expected to raise about €123m a year.

The Tweede Kamer and the Eerste Kamer (Senate) will vote on the plan later this year.