The 30% facility tax advantage
If an expat is coming to work in the Netherlands, he may experience higher cost of living than he’s used to. Therefore his employer may compensate him with the 30% facility.
What is the 30 percent facility?
The 30% facility is intended by the Dutch government as a reimbursement for expenses that will occur when an expat with specific expertise relocates to the Netherlands for work.
This reimbursement doesn’t only include housing costs and costs for learning the language, but also travel costs, medical costs and application costs for permits etc. It is also compensation, if prices in the Netherlands are higher than in the country of origin.
If the expat is eligible for the 30% facility then 30% of the expats wage is tax-free from payroll and income tax. The remaining 70% of the gross salary will be taxed at the corresponding tax rate.
Pension, bonuses and other premiums aren’t eligible for this ruling. Entrepreneurial expats can also use the 30% facility if they are employed by their BV (limited liability company), or they can take advantage of this tax advantage to attract more specialists from abroad.
Expats that are currently working for an employer and benefitting from the 30% facility can continue to make use of this facility if they decide to start up their own business in the Netherlands.
When eligible for the 30% facility?
There are certain requirements an expat must meet in order to apply for the 30% facility.
- Paid in employment.
- Recruited outside the Netherlands
- Specific expertise that is not or hardly found on the Dutch labour market. Higher education and/or sufficient working experience is often enough to justify that the specific skills are rare in the Netherlands. Employers have to prove this fact. Not the employee.
- The maximum duration of the 30% facility is 5 years
If the application is submitted within four months of starting the employment then the ruling will be retroactively effective to also cover those first four months. If the application is submitted after 4 months of starting the job the ruling is effective on the first day of the month after the month in which the application was successful.
There are tax benefits for an expat when he comes to work in the Netherlands. This is not only beneficial for the employee but also for the employer since he pays less taxes for this employee.
The 30% facility is coordinated and supervised by the Belastingdienst (Dutch tax office). This is also where an expat can apply for the 30% facility
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