What are the tax rules surrounding the reimbursement and provision of work clothing?

Work clothing uniform

For some companies, (work) clothing is a working condition, depending on the sector and the work. Often this working condition is part of a collective agreement. If this is not the case, the employer may still find it desirable for his employees to wear work clothing. For example, if the job requires protective clothing or if the employer wants to appear professional and have a uniform image.

What is work clothing?

The first question, of course, is: who will own the clothing? The employer or the employee? If the employer decides to make the clothing available only then the employer remains the owner of the clothing. For clothing that is made available and that is exclusively or almost exclusively suitable to be worn while performing work, the legislator uses the term “work clothing”. If the clothing meets this definition, then a nil valuation applies for payroll tax purposes. In that case, the clothing can be provided to the employee untaxed. Because the employee has no private benefit from this, there is no taxable income. After all, the clothing is (almost) entirely used at the workplace. In addition, the employer remains the owner, so the employee must return the clothing to his employer upon termination of employment. The cost of these clothes can therefore be deducted from the taxable profit of the employer without any problems.

But what makes clothing exclusively or almost exclusively suitable for the work performed by the employee?


The legislator gave the example of a uniform. But when is there a uniform?

The then State Secretary of Finance explained that it is about the recognizability of the clothing in relation to the employment and the company. It is important that the clothing has one or more characteristic elements or logos. A uniform is not suitable to be worn during normal daily life. Classic examples of uniforms are: the work clothes of a letter carrier, a soldier, a stewardess and a policeman.

But even when there is no uniform, there may still be work clothing, namely when the clothing is not or virtually not suitable to be worn outside the employment and moreover is not normally used in daily private life. Think of the overalls of a car mechanic or the overtime jacket worn in construction. An employer can always provide such work clothing to his employees untaxed, since they also need it to be able to perform their work safely.

A logo

What if the clothing does not qualify as uniform, but it does have a company logo? If this logo meets certain conditions, there is also a nil valuation in the payroll tax and the cost of the clothing is deductible from the result. The legislator is of the opinion that clothing with a logo with an area of at least 70 cm2 is generally not attractive for private wear. Texts and logos that are part of the logo must clearly indicate the activities of the employer (withholding agent). The nil valuation only applies when clothing is made available. Of course it is important that the clothing is actually worn at the workplace.

Occupational health and safety provision

A nil valuation applies to protective clothing and accessories that are considered to be occupational health and safety provisions because they are essential for safety, such as a pair of safety shoes. The five criteria that must be met are:

  1. the employer must have a health and safety plan;
  2. the provision of clothing is a reasonable part of that plan, taking into account the characteristics of the clothing;
  3. the clothing is worn primarily during working hours;
  4. the employee does not have to pay a personal contribution;
  5. there is no significant private saving for the employee. The private saving is less than € 454.

Want to change clothes?

Of course there is also clothing that does not meet these requirements, but which the employer makes available to his employees. One example is clothing worn by service staff. If these clothes are left behind at work and are not taken home, the legislator assumes that they are only used for business purposes so that a nil valuation applies for the wage tax. Note: Staff should not wear the clothing on their way home, change and bring the clothing back the next day, as players on a soccer team did with their official costumes. Also, staff may not wash the clothing at home; this is a job for the employer. The tax authorities may ask for proof that the clothing indeed does not leave the workplace. Consider, for example, a paragraph in the personnel guide or a signed statement from each staff member.

There are therefore various possibilities for providing (work) clothing to staff without tax consequences. But the question is whether the employee experiences these benefits as an added value. After all, in all cases the employer remains the owner and the clothing is only made available.

Clothing as a secondary employment condition

For companies that produce or sell clothing, there is another possibility to compensate or provide part of the clothing untaxed. There is a so-called targeted exemption to an amount of up to 20 percent of the fair market value of the clothing, while the targeted exemption does not exceed 500 euros per employee in a calendar year. Unfortunately, the portion that the employee does not use in a calendar year may not be carried forward to the following year. Written stipulations in the terms of employment or the personnel handbook can create clarity for the staff.

Work-related costs scheme

What if clothing is not covered by any of the aforementioned regulations and it is still provided? Then the provision is in principle taxable wages for the employee. The work-related costs scheme can then provide a solution: the clothing can then be provided to staff within the free margin of the work-related costs scheme by ‘designating’ the clothing when paying the salary, with the result that it is not taxed at the employee’s expense. The free margin of the work-related costs scheme in 2022 is 1.7 percent over the first 400,000 euros of the wage bill of the employer. Above that, the percentage is 1.18.

Two points of attention

To make use of the work-related costs scheme and avoid taxation of the employee, the employer must designate the value of the work-related clothing as a final taxable component prior to the provision. It is however sufficient that this is evident from the (payroll) administration.

If this does not happen and the employer chooses to pay outside the work-related costs scheme, the value of the clothing must be grossed up for wage tax purposes.

Compensation for cleaning costs

Does a nil valuation apply to the clothing provided by the employer? Then you may also provide a tax-free reimbursement of the cleaning costs of the clothing. A reimbursement of these costs to the employee is not wages, but a reimbursement of intermediary costs.

Are the costs deductible?

Can the employer fully deduct the cost of provided clothing from taxable profits? No, a deduction limitation applies to such costs in both income and corporate tax. Only clothing that is exclusively or almost exclusively suited to be worn in the context of the business and/or is provided with one or more clearly visible logos with an area of at least 70 cm2 is eligible for deduction. If the costs are designated within the free margin of the work-related costs scheme, then the costs may also be deducted without restriction. As mentioned above, the designation must be evident from the administration.


Finally, VAT. Deduction of VAT on the purchase of ordinary clothing will meet with resistance from the tax authorities. The question is always whether the provision of the clothing serves the business interest or the personal interest of the employee. If the latter is the case then the VAT is not deductible. The employer must also take into account the Exclusion of Deduction Decree (BUA). This regulation relates to VAT charged on costs incurred by the entrepreneur for business purposes, but which are also of a private/consumptive nature. The BUA applies a threshold of EUR 227. The VAT deduction on the attributable costs is only excluded with the employer if the threshold of EUR 227 per person per year is exceeded. Clothing (non-work clothing) falls under a personnel provision and can be considered as wages in kind and therefore falls under the BUA.

In short, there are sufficient opportunities to provide clothing to employees in a tax-friendly manner. When it comes to the ‘real’ workwear, such as uniforms and protective clothing, the regulations are fairly clear. When it comes to the other clothing, the employer is dependent on the free space in the work-related costs scheme. With the introduction of the work-related costs scheme, it was the legislator’s intention at the time to make everything simpler, but that did not quite succeed.

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