Company clothing and the taxman: what about the work expense scheme?
Is work clothing tax deductible or not? And what does the tax authorities really mean by company clothing? In this blog we explain it clearly for you.
Workwear and the WKR
Tax-free reimbursement or provision of company clothing to employees is not possible. However, you can include company clothing in the free space of the work-related costs scheme (WKR).
However, this is only possible if the tax authorities actually view the clothing as work clothes.
When is clothing work clothing according to the Internal Revenue Service?
The IRS considers clothing to be work clothing when it meets one of the following conditions:
- Specifically suitable for work
The clothing is (almost) exclusively suitable for wearing while working, such as a slouch, lab coat or dust jacket. - Clothing remains at the workplace
Employees therefore do not take the clothing home with them. - Clearly visible company logo
The clothing contains one or more clearly visible logos of the employer, such as a logo, logotype or web address. These logos together have a surface area of at least 70 cm² per garment. The area is calculated using an imaginary rectangle around the extremities of the logo. - Uniform or coveralls
Consider job-specific clothing worn only within the work. - Mandatory clothing from the Occupational Health and Safety Act
For example, safety shoes or protective clothing. A targeted exemption applies to this category, provided that:- a health and safety plan is in place;
- providing the clothing fits within this health and safety plan;
- the clothing is worn primarily during working hours;
- the employee does not have to pay a co-payment.
What if the clothing does not meet?
Does the clothing not meet any of the above conditions? Then the value of the clothing is considered wages for the employee. So in that case, it can only be done through the free space of the WKR.
Washing and repair of company clothing
Is the clothing provided untaxed? Then the costs of cleaning and repair can also be reimbursed untaxed. Washing, repairing and maintaining company clothing is the employer’s responsibility under the Occupational Health and Safety Act.
If you choose to have your employees wash their own company clothing, you must provide compensation for this. A reimbursement of these costs to an employee falls under the so-called intermediary costs (costs that an employee advances on behalf of and at the expense of the employer).