How to make a Workation tax deductible: what you need to know
In today’s work culture, where well-being and flexibility are increasingly important, the concept of a “Workation” is gaining popularity. A Workation combines work and holiday, where employees temporarily work in a foreign location to improve their well-being and productivity.
But what are the tax implications of such an arrangement? For example, can the accommodation costs of a Workation be deducted as business expenses?
In this blog, we jump into the rules and conditions of the Dutch tax authorities (Belastingdienst) and examine some relevant court decisions.
What is a Workation?
A Workation means that an employee works abroad for a certain period, focusing on both work and relaxation. This can increase productivity and reduce absenteeism, which is beneficial for both the employee and the employer.
Are my Workation costs tax-deductible?
The deduction of travel and accommodation expenses during a Workation depends on several factors:
- Necessity of the costs: The costs must be necessary for business operations. Welfare-related costs must demonstrably contribute to business activities.
- Rationale: The costs must be reasonable and proportionate. Excessive expenses for luxury stays are not deductible.
- Business character: There must be a clear business motive. Costs of a private nature are not deductible.
Case law and examples
Although there is no direct case law specifically for Workations, there are some relevant statements about travel and accommodation costs and the interests of the company:
- Dutch Supreme Court, May 3, 2023: This case emphasized that travel and accommodation expenses are only deductible if they are directly related to the business activities.
- Amsterdam Court of Appeal, January 15, 2019: This judgment stated that travel and accommodation expenses can be deductible if they fall within the normal course of business. This implies that if a "Workation" can be classified as part of a strategic business policy, it is the best way to ensure that the costs are tax-deductible. Additionally, the entrepreneur has the policy-making authority to decide where employees work.
Practical tips for the tax deductibility of a Workation
- Documentation: Maintain detailed documentation to demonstrate that the Workation serves a business purpose.
- Specification of costs: Separate business costs from private expenses. Only business expenses are deductible. Make sure you keep proof of costs, like receipts and invoices.
- Policies and procedures: Establish a clear corporate policy for Workations within your company that substantiates their business value. Ask theWorkationers for help.
Conclusion
Although a "Workation" is a grey area in current tax regulations, proper substantiation and documentation can help defend the deductibility of these costs. It is essential to demonstrate that such costs contribute directly to the business and are not simply a private benefit.
At theWorkationers, we help you with all aspects of your personal, tailor-made Workation.
In your own Workation Plan, our Experts will estimate the possible business deductible costs in your business situation after payment of €90 and the online intake.
Ready to experience a Workation? Get in touch!
