What is the so called 30% facility?
The 30% facility is a Dutch tax facility aimed at attracting foreign employees with a specific expertise to work in the Netherlands. If a highly skilled migrant comes to work in the Netherlands, he or she is possibly confronted with extra costs, so-called extraterritorial costs. All About Expats may provide the Highly Skilled Migrant with a maximum of 30% of his or her wage, including reimbursement, tax-free. This facility is known as the 30%-facility. For this, it is not necessary to prove that expenses have been incurred.
All About Expats and the highly skilled migrant needs the permission from the Tax Authorities to apply the facility. To obtain this, the highly skilled migrant and All About Expats have to submit an application. The submission is done by our partner Dutch Tax Advice who can submit applications in an efficient manner on the basis of a covenant with the tax authorities. The covenant also ensures that a shorter process time applies: about 4 weeks instead of the 4 months that applies by default.
All About Expats and the highly skilled migrant are eligible for this allowance if a number of conditions are met.
What are the conditions?
Conditions including the following will apply to making use of the 30% facility with effect from 1 January 2012:
a) The highly skilled migrant is employed by All About Expats;
b) The highly skilled migrant has been recruited from another country;
c) The highly skilled migrant has a specific expertise (expertise requirement);
d) The highly skilled migrant meets the definition of an incoming employee;
e) The Tax Authorities have issued a decision showing that the 30% facility can be used.
What is the expertise requirement?
If a highly skilled migrant who wants to work in the Netherlands wants to make use of the 30% ruling, he or she must have, among other things, specific expertise. To demonstrate this specific expertise, an income standard applies that is indexed every year.
In 2020 there will be specific expertise if the highly skilled migrant has a taxable annual salary of at least € 38,961 (€ 38,347 in 2020), excluding the tax free allowance. For highly skilled migrants who have obtained a Dutch Master’s degree in scientific education or an equivalent foreign title, and who are younger than 30 years of age, this income standard is € 29,616 (€ 29,149 in 2020) excluding the tax free allowance.
What is the definition of an incoming employee?
‘Incoming employees’ can benefit from the 30% facility. For the 30% facility, the highly skilled migrant must have lived outside the Netherlands for more than 16 months from the 24 months before his or her first working day in the Netherlands. And also on more than 150 kilometers from the Dutch border.
How is the Tax free allowance calculated?
Below a few examples.
Daisy is 31 years old, a Java developer and has agreed a salary of €4,612 excluding 8,33% holiday allowance with the user company. This salary meets the income standard applied by the IND for highly skilled migrants aged 30 or older.
The income standard for the 30% facility is €38,347 yearly taxable wage. This is per month €38,347 / 12 = € 3,195 including 8% holiday allowance. The basic salary without 8.33% holiday allowance is €3,195 / 1.0833 = € 2,950 monthly
The difference between the agreed wage of € 4,612 excluding 8% holiday allowance and the required monthly taxable wage of €2,949 = €1,662. This is 36 % of the agreed wage, which is more than the 30% maximum allowable tax-free allowance for the 30% facility.
Daisy can therefore receive 30% of what was agreed as a tax-free allowance, which amounts to €1,383 excluding 8.33% holiday allowance.
Sarah is 29 years old, a Web developer and has agreed a salary of € 3,381 excluding 8,33% holiday allowance with the user company. This salary meets the income standard applied by the IND for highly skilled migrants younger than 30. Sarah is not in the possession of a recognized master’s degree.
The income standard for the 30% facility is € 38,347 yearly taxable wage. This is per month € 38,347 / 12 = € 3,195 including 8,33% holiday allowance. The income standard without 8.33% holiday allowance is € 3,195 / 1,0833 = € 2,950 monthly.
The difference between the agreed wage of € 3,381 excluding 8.33% holiday allowance and the required monthly taxable wage of € 2,912.27 = € 431. This is 12.74% of the agreed wage, which is less than the 30% maximum allowable tax-free allowance for the 30% facility
Daisy can therefore receive 12.74% of what was agreed as a tax-free allowance, which amounts to € 431 excluding 8.33% holiday allowance.
What is the estimated impact on your net wage?
A maximum of 30% of your taxable wage is paid out as a tax-free allowance. Please note that a reduction in the gross wage can have consequences for the pension basis and any benefits and allowances, such as unemployment benefits and rent allowance. Once the application of the scheme expires, a fall in net income can occur.
What is the duration once the 30% facility is granted?
When do I have to provide the information for the application?
If the application is submitted within four months from the first day of the employment, the 30% ruling will apply retroactively from the first day of employment. If the request is not submitted within four months, the 30% rule will apply from the first day of the month following the month in which the request is submitted.
Therefore it is necessary that you provide All About Expats and their partner Dutch Tax Advice as soon as possible the required information for the application of the 30% facility. Please note that for the application a social security number is required. A social security number will be available to you after you register yourself at the municipality.
What kind of information do I have to provide?
To show the Tax Authorities that you meet the definition of an incoming employee All About Expats and their partner Dutch Tax Advice need proof that you lived more than two thirds of the period of 24 months 150k of the Dutch border. You can think about:
- copy of bank statements with cash withdrawals / debit card payments;
- copy of rental contracts that applies to the specific period in combination with proof of rent payments or energy bills;
- overview of possible municipal taxes;
- registration and deregistration certificates;
- statements of former employers (this alone is not enough).
How do I provide the information to All About Expats and Dutch Tax Advice?
You can provide the required information by using this link: LINK
With this link you also provide information about your Tax Residence status in the Netherlands and information for the Payroll Tax Deduction (you can read more about this in the form).
Deemed non-resident taxpayer
An expat who qualifies as a resident taxpayer of The Netherlands, can opt to be taxed as a deemed non-resident taxpayer. The advantage is that as a deemed non-resident taxpayer, the expat need not report any investment income to the Dutch Revenue (except for Dutch source income, such as Dutch real estate).
The choice will be made in the application form but can be changed every year. The expatriate can still deduct certain personal expenses (i.e. alimony payments, medical expenses etc.). Our Partner Dutch Tax Advice can advice you on this matter.
Expats to whom the 30%-ruling applies can exchange their foreign driver’s license for a Dutch license. This can be an advantage for expats from non EU-countries (EEA and Switzerland included), who can only use their foreign driver’s license for 6 months after their date of registry
How about the 30% facility when I switch from employer?
An employee who already has the 30% ruling can switch to a new employer and benefit from the 30%-ruling again (for the time left). The period between the one employment and the other may not exceed three months. A new application for the 30%-ruling is required.