The Netherlands is often considered as a country with an attractive business climate for expats. For many people living abroad, working in the Netherlands will lead to advantageous taxation. One of these tax facilities is the 30% facility. In this article, we will explain who can apply for this facility and what advantages this can lead to.
What is the 30% facility?
The 30% facility is a Dutch tax regulation specifically for employees recruited or sent from abroad who have a specific expertise that is not (or hardly) found on the Dutch labor market. For example, someone who has a PhD in a particular subject. Under the 30% rule, employees can receive a tax-free allowance of 30% of their taxable income to compensate for ‘extraterritorial costs’. These are additional costs related to living or working outside their country of origin. Costs of living can be more expensive in the Netherlands than in the country you worked and lived in before. Via the 30% facility, these costs can be compensated.
Conditions to be met
If you are living in the Netherlands for your work, you can apply for the 30% facility at the tax authority when you meet the following conditions:
- You are in paid employment;
- You have a specific expertise that is not or hardly found on the Dutch labour market;
- Your salary must be more than €38.961 (2021) or €39.647 (2022), or
- You are under 30 and you have a (Dutch) master’s degree and your salary is more than €29.616 (2021) or €30.001 (2022), or
- You conduct research at a designated research institution or work as a doctor. In that case, the amount of your salary is not important. You can always make use of the 30% facility.
- You were recruited outside of the Netherlands;
- You may not have lived within 150 kilometers from the Dutch border in the previous 24 months;
- You may not have lived in Belgium, Luxembourg, parts of Germany, France or the UK;
- You have worked in the Netherlands before, but your previous work period started max. 5 years ago. During your previous work period, you also met the requirements of the 30% facility.
- You are in possession of a valid decision.
If the 30% facility applies to you, it is important to know what costs can be considered as ‘extraterritorial costs’. These costs include, for instance, the extra costs of living (like water and electricity) compared to your previous home country. Moreover, costs of (double) housing, travel costs, language training etc. are considered as part of extraterritorial costs. However, costs of buying and selling a house and compensation for higher tax rates in the country of employment are not considered as part of extraterritorial costs.
Calculation of extraterritorial costs - an example
|Excl. 30%||Incl. 30%|
|Tax free compensation 30%||300||+|