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    Appealing 30% tax regulation for employees from abroad

    Now that international borders are slowly being opened up again, your organization can once again scout for migrant workers. If you hire employees from abroad, the so-called 30% tax regulation permits you to pay part of their wages untaxed. However, strict conditions apply. What are these conditions and what should you keep an eye on?

    Dutch law contains special regulations pertaining to the remuneration of employees from abroad. The purpose of these regulations is to make the Netherlands more appealing for qualified workers. Employees from abroad know they will be confronted with various extra costs when they come to the Netherlands for work. They will have to travel to the Netherlands, will have to find housing for themselves (and possibly their families), move their belongings and possessions, they will have to learn the Dutch language and will receive a higher phone bill as a result of calling to and from a foreign country.

    Untaxed financial compensation

    These extra costs are referred to in Dutch as extra-territoriale kosten (‘extra-territorial costs’ in English) and your organization may pay employees from abroad an untaxed financial compensation for these costs which constitutes at most 30% of their total wages. The compensation is thus included in the wages and is exempt from taxation by law.

    This 30% tax regulation allows your organization to offer employees from abroad appealing conditions of employment in the Netherlands. However, the following strict conditions apply to be eligible for the regulation:

    • The employee from abroad must have an employment contract with your organization. In other words, the respective individual must truly be an employee of your organization and not an external contractor, etc.
    • In the two years before his/her first workday in the Netherlands, the employee in question must have lived more than 150 kilometers away from the Dutch national border for a period of at least 16 months.
    • The employee in question possesses specific skills and/or competences which cannot (or can hardly) be found on the Dutch labor market.

    Minimal salary

    The latter appears to be quite a strong criterium, but in practice it is not. If the employee from abroad is paid an annual salary of at least € 38,347 (excluding the financial compensation for extra-territorial costs), it is usually already assumed (s)he possesses such specific skills and/or competences. For employees younger than 30 years of age with a master’s degree, this minimum annual salary is € 29,149.

    You only have to provide evidence that the skills and/or competences of the respective employee cannot be found on the Dutch labor market if virtually all employees in the industry your organization operates in receive this minimal annual salary. In other words, it must then be proven that there is truly a scarcity of such employees on the Dutch labor market.

    Employees conducting scientific research at/for your organization as well as doctors and physicians training at your organization to become a specialist are always eligible for the 30% tax regulation, regardless of their minimal annual salary.


    Connection to India does not convince the court

    A 22 year old man traveled to Germany in 2011 for his studies. He lived in a German town fewer than 150 kilometers from the Dutch border.

    After having obtained his master’s degree in 2014, the man worked for a bit in Germany. In 2015, he signed a contract with a Dutch organization and moved to the Netherlands. In 2016, he registered himself as a resident of the Netherlands.

    The organization applied for the 30% tax regulation, but the tax authorities declined the application because the man had lived within 150 kilometers from the Dutch border.

    Temporary stay

    The Indian man responded by stating he had not lived within 150 kilometers from the Dutch border before 2015, since his connection to India was then stronger than his connection to Germany. He claimed his stay in Germany was only temporary, since he had signed a temporary contract and had obtained a temporary work and residence permit. Moreover, he had done an internship in India in 2013, his girlfriend lived in India, he was in possession of real estate in India, had an Indian healthcare insurance, and had traveled to India on an annual basis between 2012 and 2015 for dental care.

    However, it was not enough to convince the judge otherwise. The latter ruled that the man had lived in Germany from the start of his studies up to the moment he started working for the Dutch organization. The man was therefore not eligible for the 30% tax regulation.

    Court of Zeeland-West-Brabant, August 16, 2018; ECLI (abridged): 5470

    Application form

    If the employee meets all criteria, your organization can apply with Belastingdienst (the Dutch revenue service) for permission to apply the 30% tax regulation to the respective employee from abroad by submitting the application form ‘Verzoek Loonheffingen 30%-regeling 2020’, which can be downloaded at

    If your application is granted, Belastingdienst will send you an official written approval containing the start date and end date of the period in which you may apply the 30% tax regulation. The regulation can only be applied within this period.

    Before 2019, the maximum period in which the 30% tax regulation could be applied was 8 years. Although this maximum has since been reduced, the regulation may still be applied for a total duration of 8 years for applications granted between January 1, 2012 and December 31, 2018.

    Check frequently

    During the period in which the 30% tax regulation is applied, you must frequently check whether or not the respective employee is still earning at least the minimally required annual salary. If not, the right to use the 30% tax regulations will be revoked with retroactive effect until January 1 of that year. This means that already filed payroll tax returns of that year must be corrected.

    You have the same administrative requirements for employees to whom the 30% tax regulations applies as any other employees. You must be careful not to pay the employee from abroad any extra financial compensation in addition to the compensation already including in his/her wages through the 30% tax regulation. This is because if the 30% tax regulation is applied, you are prohibited from reimbursing the actual extra-territorial costs made. You can only pay the employee the fixed amount in compensation which constitutes at most 30% of his/her wages, regardless of the actual extra-territorial costs made.


    Italian on internship denied 30% tax regulation

    An Italian student studying Engineering Management at the University of Bologna took a number of courses for his study in the Netherlands at the Delft University of Technology from July 1 through December 1, 2012.

    On October 1, 2013, the student in question signed an internship contract with a Dutch organization to work there from January 7 through April 7, 2013 after he had completed his studies. The University of Bologna was in no way involved in the conclusion of the internship contract.

    On June 3, 2013, the Dutch organization entered into a twelve month employment contract with the Italian, who had by now completed his studies. The latter was of the opinion the 30% tax regulation applied to him because he was a foreign national working for a Dutch organization. However, Belastingdienst (the Dutch revenue service) declined the application for the regulation. The Italian had been registered as a resident in the Netherlands since October 11, 2012.

    Housing in the Netherlands

    Moreover, the Italian had also had housing in the Netherlands since July 1, 2012. Therefore, he had lived in the Netherlands for too long to be considered an ‘employee from abroad’.

    The court agreed. Although the man had Italian citizenship, he was also a resident of the Netherlands. He was therefore not eligible for the 30% tax regulation.

    Court of North-Holland, September 11, 2019; ECLI (abridged): 7844

    Plausible costs

    Therefore, instead of paying an untaxed financial compensation through the 30% tax regulation, you may also opt to reimburse the actual extra-territorial costs made by the employee from abroad. However, you can only do so if you can provide evidence of the height of these costs.

    If the actual costs are reimbursed, the question is, of course, whether they can be reimbursed untaxed? Belastingdienst has published an overview of which extra-territorial costs can be reimbursed untaxed. Example include: costs made on obtaining necessary personal documentation, costs on travel, on storage of personal belongings and possessions for the purpose of moving house, costs on an introductory trip in order to find a house or school for the employee’s children, and any possible costs incurred due to the higher cost of living in the Netherlands.

    Secondment abroad

    The 30% tax regulation may also be applied to Dutch employees working for your organization who spent time abroad on secondment. The two most important categories of employees here to whom the 30% tax regulation can be applied are:

    • employees on secondment to Africa, Asia, Latin America and a number of East European countries;
    • employees on secondment for the purpose of conducting scientific research or providing education.

    The only condition is that these employees must spent at least 45 days in total abroad in a period of 12 months, with secondments of fewer than 15 days not included.

    The 30% tax regulation may only be applied to the wages the respective employee receives during his/her stay abroad. No official approval from Belastingdienst is required in this case.

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