Hiring from abroad in the Netherlands

Dutch wage tax law allows employers to reimburse their employees for these costs in the first five years of their stay in the Netherlands, tax free. There are two ways of reimbursing the extra-territorial costs:

1. reimbursement of actual costs; and
2. the so-called 30% facility.

Reimbursement of actual costs

The main rule is that actual extraterritorial costs can be reimbursed tax free. In order to reimburse the actual costs tax free, evidence of these double costs must be provided, and, in case of a wage tax audit, should be shared with the Dutch tax authorities. This burden of proof leads to an administrative burden for the employer.

30% facility

An alternative to the reimbursement of actual costs is the so called 30% facility. By applying the 30% facility, employees can receive 30% of their gross salary tax free as compensation for their extraterritorial costs. However, since this is a beneficial provision, there are some stringent conditions that the employee must meet. Briefly, the following conditions apply:

1. the employee earns a gross salary of at least EUR 39,647;
2. was recruited from outside of the Netherlands; and
3. lives more than 150 kilometres (as the crow flies) from the Dutch border.

Of course, there are nuances and exceptions to these conditions. The main advantage of the 30% facility is a strongly reduced administrative burden to the employer. The employer and employee apply for the 30% facility together and provide proof that the requirements have been met. Thereafter, for a maximum period of five years, the employee can receive 30% of their gross salary tax free.

Summary

It is beneficial for eligible employees to apply for the 30% facility. Thus, if you intend to have staff recruited from abroad working for your company in the Netherlands.

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Photo: PaulvSchijndel - stock.adobe.com