When you come to work in the Netherlands you may face additional expenses more commonly known as extraterritorial expenses. To cover up for these extraterritorial costs, the Dutch government has created the so called 30% tax-ruling. This means that your employer can pay 30% of your salary, including the allowance free of tax.
Among others, extraterritorial costs may include:
- finding suitable accommodation;
- the cost of double housing in case your family continues to live in the country of origin;
- higher costs of living than your country of origin;
- language courses;
- suitable schools for children;
- costs for applying for and translating permits and official documents such as residence permits, visas and driving licences;
- storage costs in case if you decide to move your furniture to the Netherlands;
- costs for consultancy for Dutch tax return;
- costs of phone calls to your country of origin;
- travel costs between the Netherlands and your country of origin.
Which employee qualifies for the 30% tax-ruling?
In order to qualify for the 30% tax-ruling, the employee must meet two fundamental requirements:
- the employee must be hired from another country than the Netherlands;
- the employee must have specific expertise that is scarce or absent on the job market in the Netherlands.
Specific expertise that is scarce or absent on the job market in the Netherlands depends on:
- the employee’s level of education;
- the employee’s working experience relevant to the position;
- the salary of the function concerned in the Netherlands in comparison to that in the country of origin of the employee.
In case the expatriate does not qualify for the 30% tax-ruling, then the incurred extraterritorial costs can be reimbursed tax-free by the employer.