Consequences of amendment of tax legislation for expense allowance

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Subdistrict Court Enschede, 27 July 2010,, ljn: BN2894


An employee worked, from 1989 until 2009, as an administrator for a company based in his own place of residence. In 2004, the company moved and the employee now had to travel 35 kilometers to work and back. According to the company’s working conditions regulations, the employer compensated him according to “the travel expenses for commuting, based on the exempt travel expenses according to the manuals for income tax and social insurance contributions”. This means compensation according to the fixed tax-deductible travel allowance. On 1 January 2004, the tax legislation is amended, and from that date, the employer can pay € 0.19 a kilometer exempt from taxes. However, the employer continued to pay the amounts practically similar to those according to the fixed tax-deductible travel allowance, that applied previously. When his employment contract is terminated, the employee claims the difference, an amount of over € 7,000 with ancillary claims (legal increase, legal interest and extrajudicial collection expenses).

The employer points to an alteration of the employment conditions regulation of 2006, but because there is no unilateral alteration stipulation and the employee has not agreed to the alteration, according to the subdistrict court, the employee is not bound by this. The employer also states that the employee forfeited his right to request subsequent payment of an expense allowance, because, due to his duties, he was always closely involved in matters concerning salaries and expense allowances, and never submitted any claims before. However, the subdistrict court states that an appeal to forfeiture of claims more is required than the passage of time or the fact that the employee failed to act.

The subdistrict court states that the employment conditions regulation does not include any amounts, but links this to the compensation exempt from taxes. Although the fiscal legislation was amended on 1 January 2004, the subdistrict court finds that the legislation is reasonable for employers and employees, both before and after 2004. The increased possibility to pay a tax-exempt compensation for commuting means that the employer can pay no more than € 0.19 per kilometer, but he can pay less. The subdistrict court fails to see why the employer should pay more, just because it is possibly to pay more with tax-exemption. The employee’s claim is therefore rejected.

The employer also contested that a legal increase would be owed on expenses allowances (rightly so, in our opinion) and stated that, for part of the claim, the time limit had expired, but the subdistrict court does not rule on these defense statements.


This case could have ended very differently for the employer. The subdistrict court explains the reference in the employment conditions regulation to the tax legislation as a reference to legislation valid at that time, therefore a ‘static reference’. But the subdistrict court could also have found that this was a more ‘dynamic’ reference, and that employer and employee agreed in advance to a compensation that was the maximum tax-exempt amount at any time. The stipulation in the regulation failed to give an indication one way or the other. It is to recommended to state clearly in the employment conditions regulation whether a reference to tax legislation (for the amount of expense allowances) is intended as a reference to current legislation or to legislation current at any given time. Questions such as these will occur more in future, when the new tax regime for expense allowances and benefits in kind from employers to employees comes into force on 1 January 2011 (although employers can choose to maintain the old tax regime until 1 January 2014).

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