The Dutch tax system can be quite complicated, especially if you don’t speak the Dutch language. The TaxSavers is an all-round tax firm. We are happy to assist you with all your questions regarding Dutch taxes.
30% Tax Ruling
The 30% tax ruling is a tax incentive for employees with specific skills who are recruited from abroad to the Netherlands. These employees are considered “extraterritorial”, and under this ruling, their employer may provide 30% of their wages as an allowance, including compensation for additional extraterritorial costs of the employee’s temporary stay in the Netherlands. This allowance is tax-free and, since 1 January 2019, has a maximum term of five years. There is a transition period for those who originally were granted the 30% ruling with a term of 8 years.
- For employees who have used the 30% ruling for five years or longer in 2019 or 2020, a transitional law of two years maximum is applicable. The ruling ended on 1 January 2021 (unless the original end date would have come before that).
- For employees who have not used the 30% ruling for five years in 2019 or 2020, the end date of their eligibility for the 30% ruling is reduced by three years. For some expats, this means that their 30% ruling also ended in 2021.
Examples of extraterritorial costs are:
- Additional maintenance costs due to Dutch prices being higher than the country you come from (e.g. meals, gas, water and electricity)
- Trips taken to the Netherlands in order to get acquainted with the country (e.g. to look for a house or a school), possibly with your family.
- Applying for or converting official personal documents, such as residency permits, visas and driver’s licenses.
- Medical tests and vaccinations for the stay in the Netherlands.
- Double accommodation costs if you keep your residence in your home country (e.g. hotel costs).
- Additional (including initial) accommodation costs. If your employer provides you with free accommodation, a sum will be taxed as income. Allowances for furniture are not subject to this arrangement.
- Storage for household effects you do not bring to the Netherlands.
- Travel to your home country (e.g. for a family visit or a family reunion).
- Additional costs of having the income tax return filled in by an adviser (if this is more expensive than having the return filled in by a comparable tax adviser in your home country). A threshold of €1,000 applies.
- Dutch language course for you and family members staying with you.
- Additional (non-business) costs of telephone calls to your home country.
- Applying for a social security exemption, such as an A1 or E101 statement.
Examples of non-extraterritorial costs are:
- secondment allowances, bonuses and comparable payments (foreign service premium, expat allowance, overseas allowance)
- capital losses
- purchase and sales costs of a home (reimbursement expenses purchase house, brokers fee)
- compensation for higher tax rates in the country of employment (tax equalization)
Scarcity, specific expertise
If an employer recruits an employee from abroad, this person is considered an incoming employee. The 30% facility for incoming employees will apply if this employee has expertise that is unavailable or scarce on the Dutch labor market, and has lived more than 150 km from the Dutch border for the past 24 months,
The Tax and Customs Administration takes the following factors into account:
- level of education
- relevant experience
- remuneration level of the position in the Netherlands compared to the remuneration level in the employee’s country of origin
Application of the 30% facility for incoming employees requires permission from the Tax and Customs Administration. The employer and incoming employee must file a joint request. The application is called “Verzoek loonheffingen 30%-regeling 2019” (Application for the 30% ruling to be applied), and it is only available in Dutch.
Seconded to the Netherlands by an international group
If an employee is seconded to the Netherlands by an international group, this may involve scarce, specific expertise without the above factors having to be assessed. In that case, the employee should fulfill the following 3 requirements:
- The employee has been seconded to the Netherlands as part of a rotation scheme within an international group.
- The employee holds a middle or senior management position within this group.
- The employee has at least two and a half years’ experience within this group.
The 30% facility for employees from abroad has a maximum term of five years starting 1 January 2019. The term starts on the first working day. This term may be reduced. This happens in the following cases:
- Employee already worked or stayed in the Netherlands: An employee who comes from abroad but already stayed or worked in the Netherlands previously will have their term reduced by the period in which they stayed in the Netherlands.
- Request not submitted within 4 months: The joint request for application of the facility should be filed within 4 months after the start of the incoming employee’s employment. If the request is made after this period, the term will be reduced.
- Employee’s expertise is no longer scarce: The Tax and Customs Administration may ask the employer to demonstrate that his/her employee still fulfills the requirement of specific expertise. It is possible that the employee’s expertise is no longer as scarce on the Dutch labor market as when they were hired or seconded from abroad. The employer can judge whether the incoming employee’s expertise is still scarce on the Dutch labor market, or have this assessed by the Tax and Customs Administration. To this end, you can submit a request to the Tax and Customs Administration/Limburg/Department of International Affairs. If it appears that the employee no longer fulfills the condition of scarce, specific expertise, the facility will end. If the employee still meets the conditions, the facility will apply until the end of the term (with a maximum of five years).
Change of withholding agent for employees from abroad
If an employee changes jobs, the 30% facility may be continued. This will require a joint request from the employee and their new employer. In this context, the period between old and new employment must not exceed three months. In this request, the new employer must demonstrate that the employee still fulfills the condition of scarce, specific expertise.
Find reliable services for your taxes, benefits, and social security needs.
The accountants and consultants firm HLB Nannen has sites in Groningen and Emmen. Although we are part of a national and international network, HLB Nannen has retained its local focus. It goes without saying that we can help you meet your fiscal obligations.
With years of knowledge, experience, and a global network of valued professionals, Expat Management Group is a dynamic group of recognized legal experts and relocation specialists.
Blue Umbrella – The Netherland’s largest online income tax return service provider. File your taxes quick and easy for a fixed fee.