Many employers are willing to pay part or even all of their employees’ study costs. They see this as an investment in the quality of their employees and organisation, and sometimes also as a way to retain employees in a tight labour market.
In some cases, the costs are shared, for example 75%-25% or 50%-50%. Training budgets are often available for this purpose, sometimes at departmental level and sometimes at central level within the organisation. Ask your employer about this.
Commercial organisations can then deduct the training costs from their taxable profits, which in many cases results in a considerable tax benefit of up to 25%.
If your employer is not willing to contribute financially to a training course, there is another option. With your employer’s cooperation, it is possible to offset part of the study costs against tax. An employer can pay study costs and deduct this investment in your training (in part or in full) from your gross salary. This reduces your taxable income, meaning you pay less income tax. You pay the training costs yourself, but from your gross salary rather than your net salary.
This is cost-neutral for the employer, while your benefit can amount to almost 50% of the training costs, depending on the tax rate that applies to you. Together with your employer, you can have a supplement added to your employment contract stipulating that you may exchange part of your gross salary for the financing of a study or training course. Under certain conditions, you can also exchange your holiday allowance, entitlement to paid holidays, bonuses, overtime allowances or a thirteenth month’s salary instead of your regular salary.
Example 1
A participant with an income of which a substantial part falls under the 49.5% tax rate wants to study a course that costs €7,500 per year. By exchanging gross salary for study costs, this course will not cost €7,500 net per year, but €3,787 per year. This represents a net saving of €3,713 per year, while it costs your employer nothing and may even yield a financial benefit*.
Example 2
A participant with an income, a substantial part of which falls under the 49.5% tax rate, wants to do a one-year course that costs €5,000. By exchanging gross salary for study costs, this course will not cost €5,000 net, but €2,525. This represents a net saving of €2,475, while it costs your employer nothing and may even yield a financial benefit*.
Please note:
- Since 2022, study costs are no longer deductible for the participant’s income tax; your employer may still reimburse you for these costs tax-free.
- A salary reduction has an impact on many other income-related schemes: for example, a lower salary may result in a lower mortgage interest deduction. It also means that the sale of leave hours will yield less. In addition, your salary can of course never be reduced below the minimum wage.
- This temporary reduction in gross salary may result in lower benefits in the event of unemployment or incapacity for work.
- In certain cases, less pension may be accrued during that period.
- Upon termination of employment, your employer may require you to repay part of the study costs that have not yet been deducted from your monthly gross salary, which means that the tax benefit for that part of the study costs will be lost if your new employer does not wish to cover those costs.
* Under the work-related expenses scheme, the costs reimbursed by the employer for a specific course are exempt. This means that this benefit or reimbursement remains untaxed. Due to the temporary reduction in gross salary, the employer may owe less social security and pension contributions (depending on the amount of the gross salary).
For further information, please contact the human resources/finance department of your organisation and see also the website of the tax authorities.
This information is intended for persons who pay income tax in the Netherlands. No rights can be derived from this information.