Evaluation of 30% facility
30% facility in general
Dutch tax law contains a facility that enables an employer in The Netherlands to pay an incoming employee, working in The Netherlands, a tax free allowance of 30% of his or her gross salary, the so called “30% facility”. This facility enables Dutch employers to attract foreign employees to The Netherlands. The background of this tax facility is that expatriate employees have extra costs as a consequence of their migration to The Netherlands (extraterritorial costs) and that the employer may reimburse the employee these costs by means of a tax free allowance. In 2015 the 30% facility was applied to 56.000 employees, mainly working in the ICT and coming from India , United Kingdom, United States and Italy.
Conditions 30% facility
The conditions that should be met in order to obtain the 30% facility are such that many expats are entitled to apply for the 30% facility.
The conditions in order to make use of the 30% facility are in a nutshell:
- You were recruited outside of the Netherlands or seconded from a country other than the Netherlands to work in the Netherlands.
- You have some specific expertise that is not or is only barely available on the Dutch employment market. This should also be reflected in the gross salary , excluded the allowance for extra territorial costs. For 2017 the salary should at least amount € 37.000. However, if you are younger than 30 years old and have a master degree the salary should be at least € 28.125, will you be considered to have specific expertise
- Does your work in the Netherlands involve conducting scientific research at a research institution? In that case, you can always make use of the 30% facility. The amount of your salary is not important for this purpose.
- In the two years prior to your first day of work in the Netherlands you lived more than 150 km from the Dutch border.
- Employee and employer have applied for the 30% facility and the tax authorities have provided a decision to approve the application for the 30% facility. The current 30% facility is valid for a period of eight years.
Report on the effectiveness of 30% facility
As a result of some criticism on the working of the 30% facility, the State Secretary for Finance has recently published a report on the effectiveness of the 30% facility. The report contains some recommendation in order to enlarge the effectiveness of the 30% facility;
These recommendations are :
- to limit the duration of the 30% facility to a period of five or six years (currently eight years);
- to enlarge the limit of 150 km or exclude the 30% facility for incoming employees coming from neighboring countries (like the UK, Belgium, Germany, Luxembourg, France , Denmark) or even all EU countries;
- to lower the percentage of 30% for salaries exceeding € 100.000.
What will be next
Since the 30% facility has attracted a lot of political attention the last years it is to be expected that in the coming years the 30%-facility will be adjusted to some extent. Whether all recommendations will be codified into new legislation is uncertain.
If legislation is amended, it is to be expected that 30% facilities based on decisions prior the change of the law will not be inflicted by any change. But employers will need to give due consideration to the possibilities that the costs for incoming employees will increase as a consequence of the change in the 30% facility, since the net income will decrease if the 30% ruling will not be applicable anymore for certain employees, is limited in time or to the amount of salary that it can be applied to.
We will keep you up to date on any change in the 30%-facility legislation. If you have any questions on this news item or another question with regard the 30%-facility you may contact Ivo Janssens (janssens@delissenmartens.nl) or your usual contact at Delissen Martens on T +31 70 311 54 11
This publication is a general summary of the law. It should not replace legal advice tailored to your specific circumstances.
