Introduction to Tax Free Benefits
The Tax-Free Benefits module allows you, as an employer, to utilize the annual free space of the WKR ('werkkostenregeling') to provide tax-advantaged benefits for your employees. Through the Alleo marketplace, employees can access benefits with gross-to-net tax advantages using budget sources like gross salary or holiday allowance.
This article provides an overview of the Tax-Free Benefits module, including setup, functionality, and key considerations.
How the Tax-Free Benefits Module Works
Here follows a high level description of the functionality of the Tax Free module:
Employee Purchases a Benefit
Employees select a benefit and budget source in the Alleo app. During this process, they digitally sign a contract addendum agreeing to the gross salary deduction.Transactions in the Alleo Portal
Each benefit purchase creates a transaction in the Alleo Portal. This transaction results in:A gross deduction from the budget source (e.g., gross salary).
Allocation of the transaction amount to the WKR free space.
Monthly Invoicing
Alleo invoices employers monthly for all benefit purchases.
Tax advantages for Employers and Employees
Employee Savings: Benefits purchased from gross salary can save employees up to 49.5% in income tax, depending on their salary and tax bracket.
Employer Savings: Reduced gross salary means lower employer contributions to social securities and other costs, potentially saving about 18% on all employee purchases.
💡 Salary exchanges can impact holiday allowance, collective pension contributions, and other salary-related components.
Setting Up Tax-Free Benefits
1. Defining Tax Free budgets
Based on the available free space in the WKR, you can define the budget available to the employee. From this budget an employee can purchase one-off benefits (vouchers) and/or monthly benefits (subscriptions).
There are 2 types of budgets you can assign to employees:
One-off budgets: A one-off budget amount, which can be used for one-off benefits only.
Monthly budgets: A monthly recurring budget amount, which be used for both one-off as well as monthly (subscription) benefits. A monthly budget can be saved up if it is not used. By default unused Tax Free budgets expire at the end of the year.
Choosing Between One-Off and Monthly Budgets
Consider these factors:
Control: Monthly budgets allow better tracking of WKR space usage.
Flexibility: Employees can use monthly budgets to pay for subscriptions on a monthly basis instead of upfront, allowing spreading of costs.
Engagement: Larger one-off budgets may encourage higher initial engagement on the Alleo Platform.
Category specific budgets
Within Alleo you can optionally provide employees with multiple budgets. For example a budget that can be spend on benefits from all categories and in addition a budget tied to a specific benefit category, for example: 'Health' or 'Mobility'. This means this budget can only be used for benefits within that specific category.
2. Setting Tax Free Limits
In addition to the Tax Free budget which is granted to the employee, you can control the spending within the WKR by setting different limits. Please note that these limits are optional in addition to assigning employee budgets, they are not mandatory:
Company Limit: This is a yearly limit which is set on a Company level. It is the sum of all Tax Free benefits purchased per year by employees. It is possible that the sum of budgets assigned to employees is higher than the Company Limit. In this case a 'first come, first serve' principle applies. This means that as soon as the Company Limit is reached, employees cannot purchase benefits anymore from their budget, as the purchase will be blocked within the Alleo platform.
Company Group Limit: It is possible to assign employees to a Company Group. A limit can be set per Company Group, which functions the same way as the previously described Company Limit.
Budget Limit: If multiple budgets are provided to a employee, a limit per budget can be set. Also here it is possible that the sum of budgets assigned to employees is higher than the Company Limit.
The limits described above can be used in combination with each other as well. As soon as any of the limits is reached, a purchase made by en employee will be blocked.
3. Budget Sources
The employer decides which budget sources are made available. Common sources for the salary exchange are Gross salary or Gross holiday allowance.
❗Ensure that employee salary cannot fall below minimum wage (WML - Wet Minimum Loon) as a consequence of the salary exchange.
4. Tax Free addendum
For every Tax Free purchase an employee has to digitally sign a contract addendum, to formally agree to the gross salary deduction. Alleo has a template addendum which you can use for this purpose, it is also possible to use a custom template.
After each purpose the employee will receive a PDF copy of the addendum via email. The addendum is also made available to you for download via the Alleo Portal.
Processing Tax Free transactions
The Tax Free section of the Alleo Portal provides a real time overview of the benefit purchases made by employees. Each benefit purchase and refund is listed as a transaction.
As mentioned, each transaction results in a mutation which needs to be processed on the salary slip of the employee, as the transaction amount results in a gross deduction from the budget source (e.g. gross salary). In addition the transaction amount needs to be allocated in the free space of the WKR.
Refunds
For multiple reasons it can happen that a previously purchased benefit is refunded, either fully or partially. In this case a transaction appears in the reporting with a positive transaction amount, as this amount flows back to the employee via the salary slip.
Exporting Transactions
In the Tax Free section of the Alleo Portal you can export the transactions to either a CSV or Excel file. You can use the date picker to determine for which period you would like to export these transactions.
You can download an example export here: Tax Free transactions export
This table contains a detailed explanation of the different fields provided in the export:
Header | Example value | Description |
user_id | 13 | A unique Alleo user ID. |
transaction_date | 2025-01-01 | The date of the benefit purchase. |
full_name | Tony Stark | Full name of the employee. |
user_status | Active | Alleo status of the employee, either active or inactive. |
Employee email address. | ||
source | Your Budget | Budget source name from which the benefit purchase was made. |
value | -15 | The benefit purchase amount. This is a minus amount, unless the transaction is a refund. |
benefit_name | Meditation Moments | The name of the benefit purchased. |
benefit_type | One off | The type of benefit, this can be:
|
alleo_custom_debtor_id | 3 | Example custom field |
alleo_custom_payroll_id | 12345 | Example custom field |
Custom Fields
It is possible to add custom fields at an employee level. The purpose of these custom fields is to facilitate the processing of these mutations in your payroll system. Useful custom fields could be an employer code or employee number. When this information is known to Alleo at the employee level, it will always be included in the reports for each mutation in the export files.
Note: The custom fields will not be visible in the Alleo Portal itself, only in the export files.