What Is A Remote Work Allowance?
Remote work allowance (or remote work stipend) is financial compensation given to employees. The allowance changes depending on the company and country, but in a general sense, it is a fixed monetary payment or reimbursement for the employees. The usage of the stipend can be a variety of reasons, from paying for office furniture, utility bills, and food to paying for health benefits
Nevertheless, there are pros and cons of reimbursement and fixed compensation. A fixed rate requires fewer logistics and time to calculate for each employee. However, a standard rate would not yield the exact amount, possibly incurring a much higher payment rate.
Remote work allowance can also indicate tax deductions. Tax deductions essentially give employees the benefit of paying less for utility bills or equipment.
Remote work allowance has the advantage of being adaptable in any circumstance. If an individual already has a great internet connection, they can buy office equipment instead. If office equipment is already available, they can opt for the company to pay their utility bills.
No More Wasted Perks
Stipends allow the employees the freedom to choose their benefits. Letting workers choose makes them ponder about which perk they would select. Gone are the days where wasted perks cost the company a fortune. With the allowance, employees get what they truly want.
Allowance or tax-deduction differs from country to country. Listed below are several countries that offer these perks and how employees can qualify.
- Must be working from home at least once a week
- Working within regular work hours (not in the evening or weekend)
- A monthly fixed allowance of EUR 144.31
- Monthly compensation of EUR 20 for internet connection if the employee uses it for work
The allowance covers in a non-exhaustive list of:
- Office supplies (paper, printer ink, mouse pad, folders, pens, etc.)
- Utility bills (water, electricity, heating, etc.)
- Food and beverages
Employers can provide additional reimbursement for office furniture such as chairs, desks, keyboards, printers, etc. The repayment is not mandatory to be deducted from the allowance as long as the equipment is intended solely for office use. Expensive equipment planned for use, such as gaming, is not accepted.
- Work from home at least a part of the week or entirely whole
Individuals cannot claim the benefits if they “choose to work from home.”
- Weekly tax relief of £6 for utilities (gas, electricity, water, telephone, and dial-up internet)
The tax relief cannot be claimed to pay for the whole bill but only for the portion dedicated for work.
Workers can also choose to get tax relief for the exact amount of extra cost incurred beyond the weekly limit. Individuals would need to provide receipts for verification.
The basis for the tax relief is the tax rate that you pay.
- Have spent the money and have evidence for verification
- Expenses must be for the individual’s occupation
The expense deduction does not apply to cases where an item is provided or already reimbursed by the employer.
If the employer provides an allowance instead of a reimbursement, the stipend would be recognized as an income and would need to be included in the worker’s tax return.
- Expense deduction for utility bills (electricity, phone, and internet) that are in the area of the workplace
- Office supplies (paper, ink, etc.)
- Office equipment
The German federal government introduced this in 2020 to help compensate employees for the higher electricity, heating and internet bills they may have encountered due to working from home. If eligible, you can claim up to 5 euros per day that you work from home, for a maximum of 120 days (a total of 600 euros)
In order to compensate for these costs, last September the government announced the new tax-free work from home allowance (thuiswerkvergoeding), which came into effect on January 1, 2022.
Under Dutch law, employers can now provide their workers with a tax-free allowance of up to two euros per day.
Agreement between employee and employer for how many days a week of work from home
However, it is important to note that if the time is split between the office and your home, the employee will not be eligible to receive the home allowance and the travel allowance simultaneously employers can decide which allowance they grant you on each day.
Employers can grant a non-taxable flat rate allowance for home office, which is also exempt from social security and non-wage labour costs, in the amount of EUR 3 per home office day, for a maximum of 100 home office days in a calendar year (i.e. max. EUR 300 per calendar year
If employees work in their home office on a regular basis, the employer has to provide them with the necessary digital work equipment. This includes both hardware (e.g. laptop, mobile phone etc.) and the required data connection.
Different countries have various regulations about remote work allowance, whether it is a lump-sum payment or a tax deduction. These benefits offer a myriad of advantages not only for the employees but also for the employers. Countries that offer these perks may be perceived as the standard, with remote work ever so increasing with each passing year. It is only a matter of time when other countries would likely implement a similar system for their citizens that work remotely.