Context

Expatriates who are assigned to the Netherlands from another country may receive tax-free reimbursements for specific costs that relate to the temporary stay outside their home country (extra-territorial costs). Where an expatriate meets certain requirements, he may be eligible for the so-called 30%-ruling. The 30%-ruling is generally available for employees assigned to the Netherlands or recruited abroad for the purpose of employment in the Netherlands, and allows a tax-free allowance of approximately 30% of the originally agreed gross salary (calculation of the actual allowance depends on the total remuneration package and extra-territorial costs may not be reimbursed on top of the 30%-allowance). Furthermore, the employee can opt to be taxed in the Netherlands as a non-resident for certain sources of income (Box 2 and Box 3 income).

The employee must be subject to Dutch wage tax and employed by a Netherlands-resident employer or a foreign employer who is a wage tax withholding agent in the Netherlands. The key condition for qualification is that the employee must have specialized skills or knowledge not readily available on the Dutch labour market (“the specialist test”). The 30%-ruling is then, in principle, granted for a maximum period of 120 months.

News

The Dutch tax authorities have become stricter in granting the 30%-ruling. Where the 30%-ruling in the past was almost automatically granted to employees from abroad, the Dutch tax authorities nowadays look closely at the qualifications of the employee concerned.

In principle, the legal employer should have itself appointed as a Dutch wage tax withholding agent and apply for the 30%-ruling. However, the State Secretary has recently approved the current practice where the receiving company in the Netherlands takes care of the formalities (application, payroll administration, etc.) on behalf of the foreign legal employer. Please note that, in situations where the employee will be covered by the Dutch social security system, the (foreign) legal employer remains responsible for carrying a Dutch payroll with respect to the Dutch social security contributions.