Employees with PC from work face tax shock

5 March 2004

AMSTERDAM — About 40,000 people who bought a computer through work face the prospect of having to pay a tax levy running into hundreds of euros, the Dutch Finance Ministry has confirmed.

The extra tax charge can be avoided by the employer agreeing to extend the period in which the staff member has to repay the loan for the computer, Junior Finance Minister Joop Wijn said.

He was replying in Parliament on Friday to MP Dezentje Hamming, who expressed amazement that a rule change she helped to introduce threatened to impact negatively on people taking advantage of the pc-prive system.

Under the pc-prive system, a maximum of EUR 1,415 is allowed tax-free when employees buy a computer with a loan from their employer.

As a result of an amendment, co-sponsored by Hamming, the tax-free sum was reduced from EUR 2,269 in 2002 to EUR 1,415 in 2003.

This relates not only to newly-purchased computers, but also for computers purchased before 2003 that have not been fully paid-off yet by the employee.

Reducing the deductible amount was intended in part to compensate the Finance Ministry in return for allowing companies to purchase the traditional Christmas package, or kerst pakket, tax-free for their staff.

Employees taking advantage of the pc-prive have to repay the financial assistance from the employer within three years. This can be done by forfeiting holidays or leave days. The computer, intended for the home, must be partly used in connection with the person’s work. It is up to the employer to verify this.

When the amendment reducing the deductible amount came into force on 1 January, this left 10 percent of the 400,000 people who have taken advantage of the pc-prive system open to the prospect of a higher tax bill.

Minister Wijn conceded in answer to Hamming that workers who ordered a computer prior to the change on the basis of the higher deduction could face a tax bill on the difference of EUR 854.

The tax payment could be avoided by employers and employees agreeing to extend the repayments.

“If the arrangement is not modified to spread out repayments over additional periods, about 40,000 employees (about 10 percent of the total number of users of the system) in 2004 could be liable for tax. This has to be seen in the light that employers and workers will alter the deals, by which the numbers affected will drop considerably,” Wijn said.

Subject: Dutch news