What is the 30% facility and how to apply for it
Employees coming to work in the Netherlands from abroad sometimes incur additional expenses. These expenses are referred to as extraterritorial costs and can include costs for (initial) housing, visa application, and/or medical examinations. As an employer, you are allowed to provide a tax-free reimbursement for extraterritorial costs that your employee can substantiate. The employee submits invoices for these expenses to you. You reimburse the employee for these costs and keep the invoices in your records as proof.
Tax-free allowance with the 30% ruling
Instead of reimbursing actual extraterritorial costs, you may, under certain conditions, make use of the so-called 30% ruling. You then provide a maximum of thirty percent of your employee's salary (including allowance) tax-free as compensation for extraterritorial costs. You do not need to prove that your employee has actually incurred these costs.
Conditions for the 30% ruling
You may only apply the 30% ruling under the following strict and cumulative conditions:
- Your employee has been recruited from abroad and works for you as an employee.
- In the two years before the first working day in the Netherlands, your employee has lived outside the Netherlands for more than sixteen months, and this residence was also more than one hundred and fifty kilometers from the Dutch border.
- Your employee possesses specific expertise that is not readily available in the Dutch labor market. This expertise is deemed "present" if your employee in the Netherlands has a minimum salary of €41,954 (in 2023, excluding the tax-free allowance). For employees under thirty with a master's degree and scientific researchers, more lenient criteria apply.
- You have a valid decision from the Tax Administration (Belastingdienst) for the application of the 30% ruling. This decision must have been requested within four months after the start of work in the Netherlands.
How does the scheme work from January 1, 2024
Starting from January 1, 2024, you can only apply the 30% ruling up to the maximum of the WNT norm (Balkenendenorm). In 2024, this amount is €233,000.
In addition, the amount of the allowance is also reduced from this date. The allowance is phased out during the term. From January 1, 2024, the maximum duration of the scheme is 60 months, and the scheme is limited to the WNT norm. For the first 20 months, you can apply the 30% ruling up to a maximum of 30% of the fiscal salary. For the next 20 months, you can apply the scheme up to a maximum of 20% of the taxable salary. In the last 20 months, it can be applied up to a maximum of 10% of the taxable salary.
For example, when hiring employees with a shortened duration of the scheme, pay attention to the maximum reimbursement percentage. A shortened duration may occur if your employee has previously worked in the Netherlands with the application of the 30% ruling.
For employees who were already employed by their employer before 2024, transitional rules apply. If the employer applied the 30% ruling to the employee's salary in the last pay period of 2023, the current conditions of the 30% ruling will continue to apply. This, of course, is subject to the duration of the scheme and provided that the other conditions for the application of the scheme are still met.
Processing the 30% ruling in the payroll administration
In the scaling down of the 30% ruling, consideration has been given to the fact that not all software providers can timely process the adjustments of the percentages. In situations where this occurs, any excess paid allowance must be corrected through a correction message.
More information?
Would you like to know more about tax and/or legal support for you as an employer or expat? Please contact Clea Cremers, global mobility specialist - tax, on telephone number +31(0)77-3217715, e-mail.
