30% Tax Facility
If the extra territorial employee meets certain conditions, they are eligible for a special expense allowance scheme called the 30% Tax Facility. It is also provides compensation for extra territorial expenses, but for these expenses you do not need to provide evidence.
Under this facility, you may provide 30% of the wages as an allowance, including compensation for the additional costs of your employee's temporary stay in another country, or his temporary stay in the Netherlands. This allowance is tax-free.
The allowance is calculated as follows:
The wages excluding the allowance amount to € 40.000.
The maximum tax-free allowance for extraterritorial expenses will then be:
30/70 x € 40.000 = € 17,143.
In this connection, there is no time restriction for the reimbursement of double housing costs.
Employees from abroad
If you recruit an employee from abroad, or if this employee is seconded to you from outside the Netherlands, an incoming employee is at issue. If this employee has expertise that is unavailable or scarce on the Dutch labour market, the 30% Tax Facility for incoming employees can apply.
In order to apply for the 30% Tax Facility for incoming employees, you must have the permission of the Tax and Customs Administration. To this end, you have to submit a joint request (employer and employee) to the Tax and Customs Administration at the following address:
Belastingdienst kantoor Buitenland
6401 DJ Heerlen
The Tax and Customs Administration will decide on the request by a ruling open to objection. This means that you can file an objection to the decision.
You can order the form for submitting a request for the application of the 30% Tax Facility for employees seconded to the Netherlands from the Tax Information Line for International Issues. +31 555 385 385
Scarcity, specific expertise
In order to qualify for the 30% Tax Facility, the incoming employee should have expertise that is unavailable or scarce on the Dutch labour market. In assessing whether this is the case, the Tax Administration takes the following factors into account:
- The employee's level of education
- The employee's relevant experience
- The remuneration level of the position in the Netherlands in relation to the remuneration level in the employee's country of origin;
- 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 fulfil the following three 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.
Duration of the facility
The 30% Tax Facility for employees from abroad has a maximum term of 10 years. The term starts on the first working day. This term may be reduced, in the following cases:
- The employee already worked or stayed in the Netherlands before taking up employment.
- The request to be considered for the 30% Tax Facility is not submitted within 4 months.
- After 5 years, it emerges that the specific expertise is no longer scarce on the Dutch labour market.
- An employee who comes from abroad, but already stayed or worked in the Netherlands at an earlier stage, will have his term reduced by the period during which he stayed in the Netherlands.
Employee's expertise is no longer scarce
After five years, the Tax and Customs Administration may ask the employer to demonstrate that his employee still fulfils the requirement of specific expertise. It is possible that the employee's expertise is no longer as scarce on the Dutch labour market as when he was hired or seconded from abroad.
You as the employer can judge for yourself whether the incoming employee's expertise is still scarce on the Dutch labour 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 fulfils the condition of scarce, specific expertise, the facility will end with effect from the 61st month. If the employee still meets the conditions, the facility will apply until the end of the term (with a maximum of 10 years).
Double tax relief
This is subject to the condition that the employee is not entitled to double tax relief in respect of those taxable wages. In other words, these wages must be fully taxable in the Netherlands.
Paying the allowance in addition to the wages
The tax-free allowance should be paid separately from the wages. To this end, the agreed wages may be reduced in accordance with employment law. An administrative division of the wages into a wage component and a tax-free allowance component for extraterritorial expenses is not permitted.
Actual expenses exceed 30% of the wages
If the total extraterritorial expenses exceed the allowance paid under the 30% Tax Facility, there is a possibility to reimburse the actual expenses. In that case, however, you will have to provide evidence for these extraterritorial expenses. If you can demonstrate that the expenses exceed 30%, the expenses actually incurred can be reimbursed free of tax. In this connection, there is no time restriction for the reimbursement of double housing costs.
Additional tax-free reimbursements
In addition to the 30% Tax Facility, school fees for an international school or for the international department of an ordinary school, can be reimbursed free of tax.
This is permitted if:
- The curriculum at the school (department) is based on a foreign system.
- The school (department) is in principle only open to children of seconded employees.
Employee insurances and social security
The 30% Tax Facility also applies to the employee insurance contributions. If your employee is insured in the Netherlands under the employee insurance schemes, you are not required to deduct employee insurance contributions from the amount of the 30% tax-free allowance.