WKR free space 2026: 2% over €400,000, 1.18% above that. Expires 31 December — cannot be carried over. Smart spending: employee gifts, Christmas packages or bonuses. Cadeo choice gift from €15, 95% redemption rate, one invoice.
Spend Leftover WKR Budget Wisely in Q4 — Use the Free Space Before It Expires [2026]
It's October, November, or December and your HR department or accountant says: there's still free space left in the WKR. Good news — but also urgent. Unused free space expires on December 31 and cannot be carried over to next year. This article shows you how to turn that leftover budget into concrete appreciation for your team, without tax surprises.
WKR free space expires on December 31 — unused budget is wasted tax advantage. The smartest Q4 spend: an employee gift through the WKR. At Cadeo you can set up a campaign in 15 minutes, from €15 per recipient. One invoice, 95% redemption rate, and your team feels appreciated. Free space 2026: 2% over the first €400,000 payroll, 1.18% above that.
1. The problem: why employers leave hundreds of millions on the table
The work-related costs scheme (WKR) gives employers an annual free space to provide tax-free reimbursements and benefits to staff. In 2026, that is 2% over the first €400,000 of payroll and 1.18% over the remainder. Sounds technical, but it comes down to free budget to appreciate your team — without you or your employee paying tax.
The problem: according to research by SimpledCard, Dutch employers leave more than half a billion euros of WKR budget unused every year. That money doesn't go into a savings pot — it just expires. On January 1 the counter resets, and the unused portion from last year is gone. The reason? Many companies don't actively monitor their free space. They only find out in December — when the accountant mentions it — that there is still room left. And then there's too little time to arrange anything. Or they think it's too complicated.
That's a shame, because the WKR was designed to be a simple scheme. You don't need to submit complex applications or arrange approvals. You designate a reimbursement or benefit as "final-levy wage" and as long as the total stays within the free space, nobody pays tax. The complete WKR explanation is in our tax guide — here we focus on the practical question: how do you spend that leftover budget wisely in Q4?
2. Step one: calculate your remaining free space
Before you start spending, you need to know how much is left. The calculation is simpler than you think:
Calculation example — SME with 80 employees
Total payroll: €3,200,000
Free space low bracket: 2% × €400,000 = €8,000
Free space high bracket: 1.18% × €2,800,000 = €33,040
Total free space: €41,040
Already spent (Q1-Q3): company outing €8,000 + Easter gift €2,400 = €10,400
Remaining budget for Q4: €30,640 — that's €383 per employee!
Ask your payroll administrator or accountant for the current status of your free space. Most payroll providers (Visma, AFAS, Exact) have a built-in WKR monitor. That way you know exactly how much you can still spend without triggering the final levy. Rule of thumb: if you have used less than 60% of your free space after Q3, you have serious budget left to surprise your team in Q4.
Note: the calculation is based on the expected annual payroll. If you hired a lot of staff during the year or lost people, the free space may turn out higher or lower than expected. So calculate with the most recent forecast from your accountant, not the January figure.
3. Eight smart ways to spend your leftover budget
You have budget left — now the question is: what do you spend it on? Not everything you give to employees automatically falls within the free space (some items are targeted exempt or fall under nil valuations — more on that in section 5). These are the eight options that do count against the free space and that you can deploy quickly in Q4:
Employee gifts and choice gifts
The most popular Q4 spend. A choice gift via Cadeo can be set up within 15 minutes, and the recipient chooses from 1,200+ products. Flexible budget: from €15 to €150+ per person. The invoice runs through the company — directly chargeable to the free space.
Christmas packages
The classic. A Christmas package falls entirely within the WKR free space. The advantage of a choice gift over a traditional package: no logistics hassle, higher appreciation (95% redemption rate versus about 70% satisfaction with standard packages).
Year-end bonus (in kind or cash)
A one-time bonus can also be paid from the free space, as long as you designate it as final-levy wage. Note: cash bonuses are more likely to be seen as "normal salary." A benefit in kind (gift, voucher) is fiscally easier to allocate.
Team outing or Christmas dinner
A staff party, team outing, or Christmas drinks event falls within the free space if it takes place off the work site. On the work site, it falls under nil valuation (and costs you no free space). Plan it consciously: dinner out uses free space, drinks at the office do not.
Gym membership or sports contribution
A contribution to your employee's gym membership falls within the free space. Popular with younger staff and fits a wellness strategy. Budget: €20–50 per month per person for the remaining months.
Work-from-home allowance (above the exemption)
The targeted exemption for working from home is €2.45 per day in 2026. Want to give extra home-working budget on top of that (think ergonomic chair or monitor)? Then the extra portion comes from the free space.
Training and courses (not job-related)
Job-related education is targeted exempt. But a non-job-related course (cooking workshop, mindfulness training, creative writing) falls within the free space. Great as a team activity in Q4.
Electronics and gadgets
A tablet, smartwatch, or noise-cancelling headphones as a Christmas gift? Can be done through the free space. Note: if the device is also used for business, it may qualify as targeted exempt. Discuss it with your accountant.
4. Why a choice gift is the ideal WKR spend
Of the eight options, an employee gift is the most popular Q4 spend — and for good reason. It combines three things you need in Q4: it's quick to arrange, it fits flexibly into any remaining budget, and it has an immediate impact on how appreciated your team feels.
But not every gift works equally well. A standard Christmas package with wine and cheese is a hit for 30% of your team, "fine" for 40%, and disappointing for 30%. That's not necessarily the package's fault — it's impossible to choose one product that will make 80+ people equally happy. A choice gift solves that: the recipient chooses from 1,200+ products from local, impact-driven brands. From Rituals to Bever, from Dille & Kamille gift cards to organic food packages. Everyone finds something that truly fits them.
The tax advantages of a choice gift via Cadeo for your WKR spend: you receive one invoice in the company name for the entire campaign (net 30 days), the amount per recipient is fixed in advance (perfect for your WKR administration), and the invoice can be directly linked to the free space. No hassle with individual gift receipts, no uncertainty about amounts. Your accountant will appreciate it.
Calculation example — using leftover budget wisely
Remaining free space budget: €4,000
Number of employees: 80
Budget per person: €50
Total: 80 × €50 = €4,000 — fits exactly in the remaining budget
Tax: €0 (within free space)
Via Cadeo: 15-minute setup, one invoice, 95% is actually chosen
5. What doesn't have to come from the free space (and therefore saves your budget)
A common mistake: employers book everything to the free space, while some reimbursements don't need to be there at all. The WKR has three categories: free space, targeted exemptions, and nil valuations. The last two don't cost you any free space — and if you book them incorrectly, you waste budget that could have been spent better on gifts.
| Reimbursement | Category | Costs free space? |
|---|---|---|
| Work-from-home allowance (max €2.45/day) | Targeted exempt | No |
| Travel allowance (max €0.23/km) | Targeted exempt | No |
| Job-related training | Targeted exempt | No |
| Tools and equipment (business use) | Targeted exempt | No |
| Coffee, tea, fruit at the office | Nil valuation | No |
| Staff party at the workplace | Nil valuation | No |
| Christmas package / employee gift | Free space | Yes |
| Staff party off the workplace | Free space | Yes |
| Gym membership | Free space | Yes |
The lesson: check with your accountant whether reimbursements currently booked to the free space don't actually qualify as targeted exemptions. If you accidentally book travel expenses to the free space, you use budget that you could have spent on gifts. The complete tax guide explains how VAT deduction and profit deduction come on top of that.
Cadeo tip: the €25 rule
A personal token of appreciation for a special moment (birthday, birth, illness) falls outside the WKR if its value stays below €25 including VAT and it is not a gift card. Use this rule for small gestures throughout the year, so your free space remains available for the big Q4 spend.
6. The pitfalls: final levy and common mistakes
Spending smart is one thing — not spending too much is just as important. If you exceed the free space, as the employer you pay an 80% final levy on the amount by which you exceed the limit. You report that final levy through the payroll tax return in the first tax period of the following year. The employee doesn't notice anything — the tax is entirely your responsibility as the employer.
Calculation example — final levy on overspend
Free space: €41,040
Total spent: €46,040 (€5,000 too much)
Final levy: 80% × €5,000 = €4,000 extra tax
That €4,000 is not deductible as business expense. Avoid this by calculating in advance.
The five most common mistakes when spending WKR budget in Q4:
Mistake 1: no current overview. Payroll can change during the year due to new hires, departures, or salary increases. Don't work from the January figure; ask your payroll administrator for the current forecast.
Mistake 2: booking targeted exemptions to the free space. As explained above: work-from-home allowances, travel expenses, and job-related training are targeted exempt. If you still book them to the free space, you waste budget.
Mistake 3: starting too late. In December it's too late for physical gifts with lead times. A choice gift is the exception — live within 15 minutes — but if you want to organize a company outing or training, start in October.
Mistake 4: forgetting VAT. The value of a gift for the WKR includes VAT. A gift of €50 excluding VAT costs you €60.50 of free space (at 21% VAT) — and that amount is what comes off your free space. Always calculate inclusive of VAT.
Mistake 5: applying the €25 threshold incorrectly. The personal token of appreciation up to €25 only falls outside the WKR if it is a physical gift for a personal moment. Gift cards do not count, even under €25.
7. The Q4 checklist: from leftover budget to impact in four steps
You now know the rules, the pitfalls, and your options. Here is the action plan to turn your leftover budget into appreciation — in four steps.
Check your free space
Ask your accountant or payroll administrator for the current status. Calculate with expected annual payroll, not the January figure.
Rebook wrongly booked items
Are targeted exemptions booked to the free space? Rebook them. That can free up hundreds or thousands of euros of extra room.
Choose your spend
Choice gift, Christmas package, bonus, outing? Combine if needed. Calculate including VAT and keep a 5–10% margin for unforeseen items.
Order and administer
At Cadeo: 15-minute setup, one invoice in the company name. Keep the invoice and record it as WKR spend in your payroll administration.
Timing is crucial. Plan your spend no later than November, so you are not stressed in December. An automated appreciation policy helps streamline this every year — you plan your gift moments in advance and the system reminds you. But even without a system: set a reminder in your calendar today for October 1: "Request WKR status." That one calendar item can save you thousands of euros in tax benefits.
Want to turn your leftover budget into a choice gift for your team? Schedule an introduction with Cadeo. We'll calculate how much budget you have, what amount per employee fits, and your campaign can go live the same day. From €15 per recipient, one invoice, 95% redemption rate.
Frequently asked questions
No. The WKR free space is annual and expires on December 31. Unused budget cannot be carried over to the next calendar year. This makes it extra important to monitor your free space throughout the year and have a plan for the leftover budget in Q4. Many companies only discover in December that there is still room left — by then, some spend options are already too late.
In 2026, the free space is 2% over the first €400,000 of your taxable payroll and 1.18% over the amount above that. So a company with payroll of €1,000,000 has €8,000 + €7,080 = €15,080 in free space. The exact calculation depends on your actual payroll, which can change during the year due to staff changes or salary increases.
If you go above the free space, as the employer you pay 80% final levy on the amount by which you exceed the limit. You report that final levy via the payroll tax return in the first tax period of the following year. Your employee won't notice — the tax is entirely your responsibility. So it pays to calculate in advance how much you can spend and keep a 5–10% margin.
Yes. A choice gift via a platform such as Cadeo is treated for tax purposes as a benefit to staff and falls within the free space of the WKR. The amount you set per recipient is the amount that comes out of your free space (including VAT). The advantage: you receive one invoice in the company name for the entire campaign, with a clear amount per recipient that can be directly linked to your WKR administration.
No. The WKR free space is only intended for reimbursements and benefits to your own employees. Gifts to external relations (customers, suppliers, partners) are corporate gifts and fall under different tax rules: 80% deductible as entertainment expenses for sole traders, 73.5% for private limited companies. VAT is deductible under the €227 threshold per relation per year. Read the corporate gifts guide for the full explanation.
The value you report for the WKR includes VAT. This is a common mistake: a gift of €50 excluding VAT costs you €60.50 of free space (at 21% VAT). Always calculate including VAT when figuring out how much free space a spend uses. At Cadeo, the amount on the invoice is the amount including VAT that you can directly offset against your free space — no surprises afterwards.
At Cadeo you can set up a campaign in 15 minutes: create an account, set the budget, upload email addresses, write a personal message, and send. The recipient gets a gift link immediately and has 90 days to choose. That means the invoice still falls in December (and therefore within the WKR year), even if the recipient only chooses in January. Ideal for last-minute leftover budget spend.
