30% facility: what is it and does it apply to me?

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:

1. You are in paid employment;
2. 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.
3. 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.
4. You are in possession of a valid decision.

Extraterritorial costs

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

In the simplified example above, you can see that applying the 30% facility can have a significant benefit on your monthly salary.

Applying

An application at the tax authority for the 30% facility can be done by the employee and employer together. The application must be done - at the latest - four months from the start date of the contract. The maximum duration of the facility is eight years and can be shortened due to previous stay in the Netherlands.

In short

The 30% facility can be very advantageous for expats who have been recruited outside of the Netherlands. If you meet the requirements, you can receive a tax-free allowance of 30% of your taxable income to compensate for extraterritorial costs. This can give you a significant advantage when paying for your travels and other expenses due to your move to the Netherlands.

Curious for more information or interested in being advised by a tax specialist? An consultation with our partner tax specialist costs only €99,- excl. VAT. Please do not hesitate to contact us for more information.