Tax free allowance of extraterritorial costs for incoming employees
The 30% ruling allows an employer to grant an employee a tax-fee allowance of 30% of his taxable income. The facility covers the so-called extraterritorial costs of the employee as a result of temporary employment in the Netherlands.
Extraterritorial costs and the 30% ruling
The 30% ruling makes working in the Netherlands more attractive to incoming employees. These, so-called expats, often have more costs. Some of these extraterritorial costs are:
- Costs for an introductory trip to the country of employment (such as school and house orientation);
- Extra costs for living in comparison to the country of origin;
- Costs for the applications of official documents (such as a visa, driver’s license, residence permit etc.)
- Costs for family visits or family reunions in the country of origin;
- Extra costs for having the Income Tax return drawn up, if this is more expensive than in the country of origin;
- Costs for language courses for the incoming employee and family members who come along to the country of employment;
- Medical costs for the stay in the country of employment (vaccinations, medical inspections etc.);
- (Double) housing costs (such as hotel costs);
- Storage costs for the part of the estate which is not moved to the new country of employment;
- Extra (non-business) telephone costs for calls to the country of origin.
Requirements of the 30% ruling (2023)
In order to qualify for the 30% ruling and the expense allowances, the incoming employee must meet the following criteria:
- The application must be submitted with the Dutch tax office within four months of entering employment;
- The employee meets the income requirements (2023):
- €41.954 gross per year, excluding the 30% allowance (if 30 years or older);
- €31,892 gross per year, excluding the 30% allowance (if younger than 30 years and in possession of a Master’s degree);
- The employee must have lived at least 150 KM from the Dutch border (in a straight line) for a period of two years, during the 16 months prior to employment;
- The employee has an employment contract;
- The employee has a work permit (if required).
- Note: There are situations in which it is possible that the employee does not meet the criteria, but is eligible for the 30% ruling.
Application for the 30% ruling
AAme can check whether you or your employee is eligible for the 30% ruling. We can also complete and submit the application with the Dutch tax office.
Feel free to contact our office for more information regarding the check and the application process for the 30% ruling or our rates.