Can I offer fitness to my employees tax-free?

To keep my employees fit, I would like to offer them fitness. Can this be done tax-free?

As an employer, you naturally like to encourage the health of your employees. Then it is nice that there are possibilities to do so in a tax-friendly way. After all, sports via the employer can (partly) be offered via the so-called Work-related Costs Scheme.

Work-related costs scheme

The work-related costs scheme allows you, as an employer, to give tax-free reimbursements to your employees. This could include meals, tools, Christmas packages and sports subscriptions. The government has determined a so-called free space for the work-related costs scheme. If you stay within this margin, you can provide tax-free allowances. The free space is determined on the basis of your organisation’s wage bill. A certain percentage of the wage bill is set as free space. The government determines this percentage per calendar year.

In 2024, this free space is 1.92% of the employer’s taxable wage bill up to € 400,000 and 1.18% on the amount above that.

Example

If you have a total wage bill of € 500,000, the free space amounts to:
1.92% of € 400,000 = € 7,680
1.18% of € 100,000 = € 1,180
Total free space € 8,860

However, a number of allowances are subject to a targeted exemption or nil valuation so they are not charged to the free space.

More info: The work-related costs scheme (WKR)

Different options for offering or reimbursing fitness

The answer to your question (therefore) depends on the situation and how fitness is offered.

1. Fitness in the workplace

If you organise fitness in the workplace, a nil valuation applies. This means that you can only offer this fitness tax-free in kind.

2. Fitness outside the workplace: work-related

A targeted exemption applies to workplace-related fitness. This means that you can give this fitness in kind but also that you can give a reimbursement.

Workplace-related fitness applies if the fitness constitutes a health and safety provision. This is the case if you see risks in your working conditions for your employees and you want to prevent and eliminate these risks with a targeted fitness programme in your occupational health and safety plan.

Ordinary fitness is insufficient to qualify as workplace fitness. Your employees must follow a targeted fitness programme related to the special risks within your company or the requirements of your employees’ jobs.

Other conditions are that you have an occupational health and safety plan and fitness reasonably forms part of this plan. Your employees must be obliged to participate in the fitness programme and you must bear the full cost of the fitness. Thus, the employees are not allowed to pay a contribution of their own.

3. Fitness outside the workplace: non-workplace related

Fitness outside the workplace is in principle taxed as far as it is not workplace-related. However, these costs can be placed in the free space so that you can still give (partial) tax-free compensation.

For example, you can choose to take out a collective subscription at a gym or have your employees take out their own subscriptions at a gym. Or you may choose to make a budget available to employees that they can spend on sports activities, a so-called vitality budget. This budget can consist of various things. Think of smoking cessation programmes, mindfulness workshops or dieting. Through this budget, an employee can often also use fitness.

Healthy eating can also be encouraged by using the work-related costs scheme. For example, you can place a fruit basket in the workplace or offer healthy lunches to employees. These costs can be reimbursed tax-free within the limits of the work-related costs scheme.

Conditions under the work-related costs scheme

You must designate the reimbursement of the sports subscription as work-related costs in advance. In addition, the reimbursement of the costs for a sports subscription must be usual, it must not deviate by more than 30% from what is usual in other equal cases (for example, compared to what other employers reimburse or the amount of the reimbursement.). The tax authorities have stated that reimbursements, benefits in kind and provisions up to an amount of € 2,400 per employee per year are always customary. This does not require a test of customary practice.

You must allocate the costs of the reimbursement, allowance or provision at the invoice value including VAT to the free space under the work-related costs scheme. Designating them as work-related costs may be evident from the administration. However, it is better to include costs, which should qualify as working expenses, in a list kept with the administration. It is also important to keep all receipts and invoices. The advantage is that you do not have to keep track of the expenses per employee.

If you do not designate the costs as work expenses, the value of the fitness for your employees will be individually taxed and therefore not exempt.

Exceeding the free space

As stated above, expenses can be reimbursed tax-free within the free space. If you exceed this free space, you pay 80% final tax on the extra amount. The final tax levy can be a high expense for you. You may want to shift or eliminate some costs, so that you can pay the sports subscriptions of your employees without incurring additional costs. Or you might choose to reimburse only part of a sports subscription (employer contribution). This way, you offer an excellent employee benefit, but the free space is less burdened. Just to emphasize, the free space is calculated for all expenses which are designated to the free space together, not per expense individually. So you have to check whether you have already reimbursed other expenses to the employees which make use of the free space.

Conclusion

The work-related costs scheme offers employers the opportunity to encourage sports and healthy employees. By using the scheme, employers can offer their employees a little extra without having to pay tax on it. In addition, it can contribute to a healthy and vital working environment, which ultimately can also be positive for the company’s productivity and absenteeism rate.