30%-Facility for expats

Benefits of the 30%-facility

Expatriates in the Netherlands may qualify for a special tax facility, the 30% facility. This facility provides multiple significant benefits:

  • Employers are allowed to pay the employee who is recruited from abroad a tax free allowance of up to a maximum of 30% of his employment income during a maximum period of five years.
  • Employers are allowed to pay a tax free allowance to cover the international school fees.
  • The employee who becomes a Dutch tax resident, can request to be treated as a nonresident taxpayer of the Netherlands for certain income elements.
  • The employee is able to exchange his foreign driver’s license for a Dutch driver’s license, without taking a driving test.
  • This facility does not require you to demonstrate that any expenses have been incurred.

Conditions

In short, the conditions that must be met in order to be eligible for the use of the 30%-facility are:

  • The employee must be recruited from abroad or must be assigned to the Netherlands.
  • The employee’s employment income has to be subject to Dutch wage tax withholdings.
  • During the 24 months prior to the employment start date, the employee must have resided outside a 150 kilometer area from the Dutch border for more than 16 months.
  • The employee has a standard employment income of at least EUR 38.347 per year (2019: EUR 37.743) excluding the 30% allowance. A lower salary threshold of EUR 29.149 (2019: EUR 28.960) may apply for graduates under the age of 30 holding a master’s degree. The salary criterion must be met on a continuous basis. Therefore, it is important that an assessment is performed each year, especially in cases where employees take unpaid leave or maternity leave, or decide to work on a part-time basis, et cetera.
  • The employer and the employee explicitly agree that a tax free allowance of up to 30% is included in the compensation package.
  • The facility can be applied for a maximum period of five years in total. Barring a few exceptions, the total period the employee has worked or stayed in the Netherlands in the past 25 years reduces the aforementioned maximum eligibility term of five years.
  • In order to be able to apply the 30% facility from day one, the 30% facility must have been successfully requested within four months after the start of the employment.

What we can do for you

Govers is expertized in assisting employers with the 30% application process, calculating the impact of the 30% facility on an employee’s net salary and performing payroll reviews annually to make sure that the facility is correctly implemented in the Dutch payroll.

 

Maarten van der  Steen

Maarten van der Steen

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