GLOBAL MOBILITY SERVICES: TAXATION OF INTERNATIONAL ASSIGNEES - NETHERLANDS - PWC
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Global Mobility Services:
Taxation of International
Assignees – Netherlands
Netherlands
Taxation issues &
related matters for
employers &
employees 2019
Last Updated: April 2016
This document was not intended or written to be used, and it Menu
cannot be used for the purpose of avoiding tax penalties that
may be imposed on the taxpayer.
Last Updated: February 2019 This document was not intended or written to be used, and it cannot be used for the purpose of avoiding tax penalties that may be imposed on the taxpayer.
Country:
Netherlands
Introduction: International assignees working in the 4
Netherlands
Step 1: Understanding basic principles 5
Step 2: Understanding the Dutch tax system 7
Step 3: What to do before you arrive in the 22
Netherlands
Step 4: What to do when you arrive in the 27
Netherlands
Step 5: What to do at the end of the tax year 30
Step 6: What to do when you leave the Netherlands 32
Step 7: Other matters requiring consideration 34
Appendix A: Rates of tax 36
Appendix B: Calculation of taxable income 37
Appendix C: Double-taxation agreements 39
Appendix D: Social security agreements 41
Appendix E: Netherlands contacts and offices 42
Additional Country Folios can be located at the following website:
Global Mobility Country Guides
Global Mobility Country Guide (Folio) 3
Introduction: International assignees working in the Netherlands PwC is the world's leading provider of professional services. The People and Organisation network works together with its clients to find solutions for the challenges they encounter when transferring people from one country to another. This brochure is intended to inform foreign nationals and their employers about tax, social security and immigration issues in the Netherlands. This guide is not exhaustive and cannot be regarded as a substitute for professional advice addressing individual circumstances. Nevertheless, answers will be found to most of the questions raised by an expatriate or his/her employer. More detailed advice should be sought before any specific decisions are made about these issues. More information can be obtained from our Dutch offices specializing in People and Organisation’s Global Mobility Services (see Appendix E). 4 People and Organisation
Step 1:
Understanding basic principles
The scope of taxation in the The tax year Partners
Netherlands
2. The Dutch tax year runs from 3. Partners of expatriate
1. A foreign national working in January 1st to December 31st. employees are independently
the Netherlands will, in general, liable to Dutch tax on their
become liable to Dutch tax. The (employment) income. Under
main taxes are: conditions a partner may
qualify as a ‘fiscal partner’ for
Income tax; Dutch tax purposes. A 'fiscal
Wage tax; partner' is defined as a spouse
or a legally registered partner.
Dividend tax; Under certain conditions,
couples living together who are
Gift and inheritance tax; not married or registered are
also (automatically) regarded as
Real estate occupancy tax;
fiscal partners.
Real estate transfer tax;
Fiscal partners are (as
Social security mentioned) independently
contributions. liable to Dutch tax on their
income. However, for so-called
joint income and deductions,
fiscal partners may choose
which partner will take the joint
income/deductions into
account in his/her income tax
return.
Global Mobility Country Guide (Folio) 5
Determination of residence The most important criteria in 5. In practice, an expatriate is
this respect are as follows: generally considered a resident
4. Under Dutch tax law, an of the Netherlands if:
individual’s place of residence Where a permanent home
for tax purposes depends upon is maintained; As a married person, his
all facts and circumstances family accompanies him to
applicable to the personal Where employment duties the Netherlands; or
situation. These facts and are performed;
circumstances are used to As a single person, he stays
Where the individual's in the Netherlands for more
determine where the center of
family resides; than one year.
an individual’s personal and
economic life is located. If the Where the individual is Expatriate status
center of the individual’s registered with the local (30% ruling)
personal and economic life is authorities;
located in the Netherlands, he 6. Under certain conditions, a
or she is considered to be a Where bank accounts and foreign employee assigned to
resident of the Netherlands for other assets are the Netherlands may be
tax purposes. maintained; and granted the right to be taxed
The intended length of stay in accordance with a special
Dutch tax regime, called the
in the Netherlands.
30% ruling. This ruling is
outlined in detail later on in
this brochure.
6 People and Organisation
Step 2:
Understanding the Dutch tax system
Taxation of resident individuals
Taxable income Box 1: Allowable expenses relating
to employment and home
7. Residents of the Netherlands 9. Box 1 includes an individual’s ownership.
are subject to Dutch tax on their taxable income from work and
world-wide income. This world- home ownership. This type of Box 2:
wide income is divided into income includes the following:
three different types of taxable 11. Box 2 includes an individual’s
income. Each type of income is Employment income; taxable income from a
taxed separately under its own substantial interest (defined
Home ownership of the further on in this brochure).
schedule, referred to as a 'Box'. principal residence (i.e.
Each Box has its own tax
deemed income lowered by Box 3:
rate(s). The individual's mortgage interest
combined taxable income is deduction); 12. Box 3 includes an individual’s
determined on the basis of the taxable income from savings
aggregate income in these three Gains from self- and investments (investment
boxes. employment and other yield tax).
professional activities;
8. For fiscal partners, some of the Employment income
income is taxed jointly (joint Periodic receipts and
income/deductions). With few payments; 13. Employment income includes
exceptions, income must be all direct or indirect cash
recognized at the time it is Benefits relating to income payments or benefits in kind.
received or offset, is put at the provisions (e.g. refund of Benefits in kind are generally
disposal of the individual, annuity premiums). taxed at market value.
begins bearing interest or is However, if the benefit in kind
10. This taxable income is subject is required for the proper
collectible and receivable.
to deductions for: performance of the employment
Appendix B contains an activities, the individual is taxed
Expenses relating to income
overview of how taxable income on what he saves (i.e. costs he
provisions, such as annuity
is calculated. avoids incurring by virtue of the
premiums provided that
provision of the benefit). There
certain conditions are met;
are fixed valuation rules
Personal deductions; regarding certain benefits in
kind (e.g. for company car,
(restricted) shares, housing
and meals).
Global Mobility Country Guide (Folio) 7
14. In principle, all iii. The following expenses can o Extra-territorial costs
reimbursements made by the be reimbursed tax free in (which includes the tax
employer to the employee are addition to the 1.2% budget free allowance under
considered (taxable) wage. (below listed expenses are the 30% ruling);
However, 4 types of exceptions the so-named ‘specific
apply to this general rule. exemptions’): o Business related
moving expenses;
i. The employer has under the o Travel expenses at EUR
work-related cost scheme a 0.19 per kilometer; o Discounts on company
budget of 1.2% of the total products.
fiscal wages of its o PC’s and mobile phones
when necessary for an iv. So-named intermediary
employees to reimburse
employee’s costs (costs paid by the
incurred expenses tax free employee on behalf of the
amongst the employees. employment activities;
employer) can also be
ii. A limited number of o Business related reimbursed tax free in
workplace related facilities expenses for temporary addition to the 1.2% budget.
that fall within the scope of stay (e.g. hotel and Intermediary costs are for
the 1.2% budget (such as meal expenses); example costs of a business
working clothes, related meal or gasoline for
o Business related a company car paid by the
consumptions and meals at expenses regarding
the workplace) are valued employee who can
courses, seminars, afterwards claim the
at nil or are valued (very) symposia, business
low. expenses from his
literature, etc.; employer.
o Study expenses;
8 People and Organisation
Tax credit tax-facilitated pension for Principle Residence
salary in excess of EUR 107,593.
15. A general tax credit will apply to It might therefore be advisable 20. The principal residence is taxed
all taxpayers. In addition, there for employees who participate in Box 1 based on the property’s
are a number of specific tax in a foreign (non-EU) pension fixed (deemed) rental value.
credits that are applied on a scheme and whose salary This rental value is based on the
case-by-case basis. The most exceeds EUR 107,593 to seek property's fair market value as
important specific tax credit is further guidance on the impact determined by the local
the labor rebate. Taxpayers who of these limitations. Making authorities. The deemed rental
receive business profits, income further arrangements might be value ranges from 0%-0.65% of
from employment or income recommended, to ensure that the fair market value. The
from independently performed their pension scheme still suits deemed rental value on
services are entitled to claim their whishes. property valued higher than
this credit. EUR 1,080,000 is EUR 7,020
Foreign pension schemes plus an additional 2.35% of the
Social security and value above EUR 1,080,000.
pensions 18. The Dutch Tax Authories can
assign a foreign pension 21. Interest paid on (mortgage)
16. Payments that employees make scheme as a recognized Dutch loans related to the principle
to foreign social security and pension scheme. As a result, residence is in principle
pension schemes may be tax the foreign pension scheme deductible in Box 1 for a
deductible if the schemes would does qualify under Dutch law, maximum period of 30 years.
qualify under Dutch law. Please which means that payments However, from January 1, 2013
note that employers to the pension scheme are tax the conditions under which an
contributions to foreign social deductible. For employees individual can benefit from the
security and pension schemes from the EU/EEA a (mortgage) interest deduction
can be taxable (and employees simplified procedure applies have become more strict. A
contributions non-deductible) if for recognition of the foreign distinction should therefore be
the schemes are non-qualifying. pension scheme. made between loans that
Upon emigration, the Dutch tax already qualified as a mortgage
authorities may issue a Home ownership loan for a principal residence
precautionary tax assessment (‘eigenwoningschuld’) on
on the capital sum of company 19. Individuals who own
property in the Netherlands December 31, 2012, and
pension accrued (or, depending mortgage loans that did not
the applicable tax treaty, on the will be liable to pay tax on
this (deemed) source of qualify as a mortgage loan for a
amount of contributions that principle residence at that
were subject to Dutch tax relief) income in the Netherlands. A
moment (e.g. mortgage loans
in order to retain their right to distinction should be made
between a property that is concluded for a principal
levy tax on that amount. residence from January 1, 2013
considered to be the
17. The tax beneficial build-up of individual's principal onwards).
pension entitlements is capped residence and a property
to a maximum income. For owned for other purposes.
2019, the maximum salary
amounts to EUR 107,593. It is
no longer possible to accrue
Global Mobility Country Guide (Folio) 9
22. For mortgage loans that did not occur to mortgage loans that 3 taxation is explained further
qualify as a mortgage loan for a were concluded prior to on in this brochure). The
principle residence on January 1, 2013, or situations mortgage interest paid for this
December 31, 2012 and where where the property for which type of real estate is not tax
transitional law is not the mortgage loan was deductible. However, under
applicable, the new conditions concluded qualified as a conditions, certain exceptions
can be summarized as follows: primary residence previously. may apply (under which Box 1
treatment and thus mortgage
The interest on (mortgage) 25. Furthermore, from January 1, interest deduction is still
loans will only be 2014, the maximum effective allowed), when the home is to
deductible if the mortgage tax rate against which the be sold or a new home is bought
is fully repaid within a mortgage interest is deducted or for a property under
maximum period of 30 has started to decrease construction.
years; annually. In 2019, the
maximum effective tax rate is Substantial interest (Box 2)
These loans must be repaid 49%.. As from 1 January 2020
periodically on the basis of the percentage at which the 28. In Box 2, income from a
a fixed pattern (e.g. linear/ interest is deducted per annum substantial interest is taxed,
annuity), which is included is to be decreased in four stages less the allowable losses and
in the loan of three percent to ultimately expenses from that substantial
agreement/contract as well. 37.05 percent in 2023. interest. Generally, a taxpayer
For foreign loans proof earns income from a substantial
needs to be provided (strict 26. If an individual has no interest if he/she owns at least
deadlines apply); (mortgage) loan, or the 5% of the shares in a company.
(mortgage) interest paid is The Box 2 tax rate is 25%.
23. For loans that do not meet the lower than the deemed rental
above-mentioned conditions value, the individual will be Investment yield tax
and where the transitional rules granted a deduction on the (Box 3)
are not applicable, the mortgage deemed rental value (i.e. the
interest deduction will no 29. In Box 3, income from savings
difference between the deemed and investments is taxed.
longer be allowed. rental value and the interest Rather than taxing the actual
24. For mortgage loans that paid). From 2019 onwards, this income received from saving
qualified as a mortgage loan for difference may only be partially accounts, bonds, shares and
a principle residence on deducted in box 1. This real estate, Dutch law assumes a
December 31, 2012 (and in deduction will be reduced fixed return on investment (see
specific other situations), annually. Appendix A) on net assets
transitional rules apply. If Real estate owned for other (assets less liabilities). The
transitional rules apply, the purposes value and fiscal qualification of
interest paid can be deducted the assets on January 1 is
for a maximum period of 30 27. In case real estate does not decisive. This fixed ROI is taxed
years, irrespective if the qualify (or no longer qualifies) at a fixed rate of 30%. However,
mortgage loan is being paid off as a principal residence, the real an amount of 30,360 euros is
or not during this period. A estate and the related exempted from this taxation.
careful assessment is required (mortgage) loan are taxed in For partners this is 60,720
in situations where changes Box 3 rather than in Box 1 (Box euros.
10 People and OrganisationDeductions called lucrative investment premiums towards (temporary)
(carried interest arrangements) old age annuities and a
30. Extraordinary expenditures, under taxation in Box 1. The survivor's annuity.
personal pledges and donations income from a lucrative
are tax deductible within limits. investment, both income and Personal deductions
A distinction is made between capital gains, will, in principle,
deductions relating solely to 37. Personal deductions are
be taxed in Box 1 rather than deductible from income (in
Box 1 income and those relating Box 3, and as such, be taxable
mainly to the taxpayer's chronological order) in Boxes 1,
at progressive tax rates (up to
personal circumstances. 3 and 2.
51,75%).
31. Insofar as these personal 38. The following expenses are
Commuting expenses considered personal
deductions exceed the (positive)
income in Box 1, they will be 34. With respect to costs of deductions:
deducted from Box 3 income traveling by public transport, a Alimony and other
and, thereafter, Box 2 income. fixed amount can be deducted
maintenance obligations;
Any remaining balance may be as commuting expenses. The
carried forward to the next fixed amount depends on the Specific medical and health
year(s). distance traveled and the expenses (under restriction
number of days traveled per of limited costs);
Incentive income and week. Costs of traveling
executive remuneration associated with traveling by car Weekend care expenses for
or motorbike cannot be handicapped close relatives
32. Income and benefits from
deducted. older than 21 years;
equity based remuneration is
generally taxable at the moment 35. Employers can reimburse actual Study costs and other
the benefit becomes costs of commuting tax free educational expenses (From
unconditional (shares) or at the 2020 onwards, this
regardless the way of travel with
moment the benefit is exercised deduction will be replaced
a maximum of EUR 0.19 per
(stock options). The income is by a subsidy for every
kilometer. Insofar as the person that has obtained a
pro-rated for the period it is reimbursement exceeds EUR minimum level of education
earned (e.g. the vesting period) 0.19 per kilometer, the excess is as determined by the
in case the individual worked considered taxable wage. If government);
and was taxable in more than communting takes place with
one country during this period. public transport, the actual Charitable donations;
The Dutch taxable income is costs can be reimbursed tax
determined based on the net free. Foreign tax relief
benefit (i.e. gross benefit minus
any exercise price paid). Life annuity premiums 39. According to Dutch tax law,
Furthermore, a discount applies resident individuals are taxed
on the taxable value in case of a 36. Life annuity premiums are on their worldwide income.
holding lock or forced deductible under certain However, tax treaties concluded
postponed exercise date. conditions, amongst those the by the Netherlands and other
existence of a pension gap. unilateral provisions of law may
33. The rules regarding ‘excessive’ Other tax deductible premiums result in the exemption of
remuneration have brought so- for life annuities include certain types of foreign-sourced
Global Mobility Country Guide (Folio) 11income from Dutch taxation. the credit method (i.e. actual Taxation of non-resident
According to most tax treaties foreign tax paid). Nonetheless, individuals
the Netherlands has concluded, exceptions may apply if certain
Taxable income
the following types of income conditions are met. Some
may be exempted from Dutch countries also levy withholding 43. An individual's residency status
taxation: taxes (source tax) on dividend is determined as described in
and interest payments to Dutch the section entitled
Income from a business or residents. In general, such "Determination of residence",
profession, provided that foreign withholding tax is above.
the income is generated by credited against Dutch income
a foreign permanent tax payable. 44. Similar to residents of the
establishment or fixed base; Netherlands, individuals who
Wage withholding tax qualify as non-residents for tax
Income from employment, purposes are taxable in the
provided that the Dutch 41. Employment income is Netherlands based on the Boxes
resident spends more than generally subject to wage tax system. They are liable to pay
183 days in a 12 month withholding. Wage tax is levied tax on their Dutch sourced
period (or in a tax or as a prepayment of income tax. taxable income in Boxes 1, 2
calendar year) in the The wage tax rates are based and 3. This comprises the
foreign country or the upon the income tax rates, following:
remuneration is (deemed to taking into account general and
be) paid by an employer labor levy rebates. If the Box 1:
resident in that foreign amount of wage tax withheld is
country or borne by a lower than the ultimate income Taxable income from
permanent establishment of tax liability, or if no tax is current or past employment
the employer in that withheld, tax will be due on the performed in the
country; receipt of a provisional or final Netherlands;
income tax assessment after Taxable income from
Directors' fees received in having filed a Dutch annual
respect of a directorship of lucrative investments in the
income tax return. Netherlands;
a foreign-resident
company; Other taxes Gains from self-employment
Income from foreign real 42. The most important other taxes and other activities in the
estate. levied by the Netherlands are: Netherlands attributable to a
Dutch permanent
40. Generally, the exemption is Inheritance and gift tax; establishment or
calculated as a pro-rata representative;
reduction of the amount of Real estate transfer tax;
Dutch tax computed on the Certain periodic benefits and
Real estate tax; and payments;
individual's world-wide income
(exemption with progression Road tax. Income received in the
method). However, the employee's capacity as a
avoidance for double taxation Further details can be found later
managing or supervisory
for director’s fees is under most on in this brochure.
director of a Dutch
tax treaties concluded, based on company;
12 People and Organisation Home ownership of the the aggregate 183 days in a from employment abroad if the
principal residence (deemed calendar year, tax year or income was subject to taxation
income); any twelve months period in the other country and if the
commencing or ending in taxation rights on this income
Box 2: the fiscal year concerned are allocated to the foreign
Dividend and (capital) gains (depending on the tax country in question.
from a company in the treaty); and
Definition employer in tax
Netherlands in which the The individual’s salary is treaties
taxpayer has a substantial paid or borne by an
interest; employer who is not a 47. The policy guidelines on the
resident of the Netherlands; definition of “employer” in the
Box 3: employment article of tax
and
Income from real estate treaties have been set out in a
located in the Netherlands The individual's salary costs specific Decree published by the
are not borne by a Dutch Ministry of Finance. The
(other than the principal
permanent establishment or Decree solely applies in case of
residence);
fixed base in the assignments to a separate legal
Entitlements relating to real Netherlands. entity in the country of
estate in the Netherlands; employment (it does not apply
Deemed country of to assignments to permanent
Profit-sharing entitlements employment establishments). Furthermore,
relating to companies whose the assignment must be in the
46. A non-resident employee
management is based in the context of an exchange
Netherlands (except if the (employed with an employer
programme or career
shareholding qualifies as a who is a Dutch wage tax
withholding agent), who development, or in situations
lucrative investment which where the employee in question
performs part of his
is taxed in Box 1). has a specific expertise. Based
employment duties in the
on the Decree, in some cases it
Employment income Netherlands and part outside
the Netherlands, is deemed to can be assumed that –
45. Under Dutch tax law, all income have carried out 100% of his irrespective of who is actually
derived by non-residents from employment duties in the bearing the employment costs –
employment duties physically Netherlands. Consequently, the the host country employer is
performed in the Netherlands, non-resident is in principle not considered as the tax treaty
is in principle subject to Dutch liable to pay Dutch income tax employer when an assignment
income tax. However, according on his total employment income does not exceed 60 days over a
to most tax treaties concluded twelve-month period. This relief
(not only on the part of the
by the Netherlands, the employment income that is intended for group entities as
employment income is relates to Dutch workdays). defined in the Dutch Wage Tax
exempted from Dutch taxation Act (which means that a 1/3
Subject to double taxation
if the following three treaties between the equity stake is required).
cumulative conditions are met: Netherlands and other Groups that do not satisfy this
requirement, but do present
countries, the deemed country
The individual is present in themselves as a group, can file
of employment provisions do
the Netherlands for a period an application with the Dutch
not apply to income earned
or periods not exceeding in
Global Mobility Country Guide (Folio) 13tax authorities to request any exercise price paid). lucrative investment and if the
corresponding application of Furthermore, a discount applies substantial interest route is
the Decree. on the taxable value in case of a chosen.
holding lock or forced
48. When an employee is subject to postponed exercise date. 54. The Dutch taxation on
Dutch wage tax, the foreign severance payments that relate
(formal) employer is in 50. Specific rules regarding to activities performed in
principle liable to remit wage ‘excessive’ renumeration apply different countries, is based on
tax. In other words, the home to income from lucrative the OESD guidelines. This
country employer will have to investments (i.e. both income means for example that the
register in the Netherlands and and capital gains). These gains (actual) severance payment is
process a Dutch (shadow) will, in principle, be taxed in allocated for tax purposes
payroll. However, there is a Box 1 rather than Box 3, and, as according to the taxation on the
general facility to transfer the such, be taxable at progressive regular employment income
wage tax withholding obligation tax rates (up to 51,75%). during the twelve months
from the home country (formal) preceeding the termination of
employer to a Dutch entity 51. For non-residents, where and to employment.
within the same concern. As the extent (taxable) activities
such, the Dutch entity can take are performed in the Director's fees
over the withholding obligation Netherlands, (part of) the
lucrative investment is subject 55. Generally, based on most
from the home country
to taxation in the Netherlands Dutch tax treaties,
employer. A request should be incomeearned as a managing
filed with the Dutch tax based on Dutch domestic tax
legislation. However, it should or supervisory director of a
authorities in this respect. company that is domiciled in
be determined on a case-by-
Incentive income, case basis whether the the Netherlands is fully
executive remuneration Netherlands also have the right taxable in the Netherlands. It
is irrelevant in this respect
and severance payment to levy tax on the income from
lucrative investments based on whether the director’s duties
49. Similar to resident taxpayers, the applicable tax treaties. are actually carried out in the
non-resident taxpayers are Netherlands.
generally taxed in the 52. Furthermore, for individuals
who arrive in the Netherlands Personal deductions
Netherlands on income and
benefits from equity based after January 1, 2009, whilst 56. A non-resident taxpayer is
remuneration at the moment holding a lucrative investment granted with the following
the benefit becomes and who did not qualify as non- personal deductions:
unconditional (shares) or is residents for Dutch tax
exercised (stock options). The purposes prior to the date of Foreign social security
income is pro-rated for the arrival for this (lucrative) contributions paid in
period it is earned (e.g. the investment, a step up to the fair relation to Dutch sourced
vesting period) in case the market value of the lucrative employment income,
individual worked in more than investment on the date of provided that certain
one country during this period. arrival will be applied. conditions are met;
The Dutch taxable income is
53. Finally, different rules may Contributions made to a so-
determined based on the net
apply in case of an indirect called qualifying pension
benefit (i.e. gross benefit minus
14 People and Organisationscheme (limitations may applies, in principle, to non- can qualify as qualifying non-
apply); resident taxpayers who operate resident taxpayers of the
a company via a permanent Netherlands (this rules out
Expenses for income establishment in the third country residents).
provisions, such as annuity Netherlands. The amount of the Furthermore, the Netherlands
premiums and premiums tax portion of the employed will only grant the benefits to
for disability or accident person’s tax credit will be based the extent that the non-resident
insurance provided that on the worldwide employment taxpayer is not able to
certain conditions are met; income. Furthermore, on basis effectuate these deductions in
Interest and costs on of tax treaties, Ministerial the home country.
Decrees and EU law, non-
(mortgage) loans for real Income tax rates
estate, provided that the residents may also be entitled to
real estate qualifies as a the income tax part of various 61. For non-resident employees,
levy rebates normally only the income tax rates are the
principal residence for
Dutch tax purposes. This available to residents. same as for resident taxpayers.
includes, for example, the However, in the Netherlands,
59. If non-residents are covered by the social security tax rates are
scenario in which the the Dutch social security levied together with the tax
former Dutch principle scheme, they are entitled to the rates. As such, for employees
residence is for sale or is social security part of all not covered by the Dutch social
being sold, provided certain applicable evy rebates security system, taxation on box
limitations in time are met. 1 income (e.g. employment
Kindly note that as of Qualifying non-resident income) is effectively levied at
January 1, 2015, it may be status “lower” tax rates due to the
necessary for non-residents exclusion of the social security
to be considered as 60. As of January 1, 2015 the option tax rates. (see Appendix A).
qualifying non-resident in regime (‘keuzeregeling’) has
order to be eligible for been revoked and replaced by Other taxes
Dutch mortgage interest the ‘qualifying non-residents’
regime. As a consequence, only 62. Non-resident taxpayers may
deduction.
non-residents who meet the also be subject to other taxes.
Levy rebates conditions to be considered as The most important of these
qualifying non-resident taxes are:
57. The Dutch levy rebates consist taxpayers of the Netherlands
of both an income tax and a Inheritance and gift tax;
(i.e. individuals who earn 90%
social security part. of their worldwide income in Real estate transfer tax; and
58. As of 1 January 2019, non- the Netherlands and meet
certain other conditions) are Real estate tax.
qualifying non-resident
taxpayers who are resident in eligible for personal/familial
Information about these taxes is
an EU member state, the EEA, deductions, tax credits, etc.
normally only available to summarized further on in this
Switzerland or the Carribean brochure.
Netherlands will be given the Dutch tax residents. Please note
statutory right to the tax that only residents of EU
countries, Liechtenstein,
portion of the employed
person’s tax credit. The same Norway, Iceland, Switzerland,
Bonaire, Sint Eusatius or Saba
Global Mobility Country Guide (Folio) 15tax". The term "partial" The employee should have
indicates that, even if the lived outside a 150 km
Special regime for
employee qualifies as a radius from the Dutch
expatriates (30% ruling) resident of the Netherlands, borders for more than 2/3rd
General he is treated as a non- out of 24 months before
resident taxpayer for Box 2 being recruited to work in
63. The 30% ruling is a special tax and Box 3 income, but as a the Netherlands, in order to
regime available for inbound resident taxpayer for Box 1 be considered as incoming
employees who meet certain income. Hence, he is employee.
conditions. Before explaining eligible for all general and
these conditions in more detail, personal allowances in Specialist test
please find below the main connection with Box 1, as
features of the 30% ruling: 65. The 30% ruling only applies to
well as for tax credits; employees with special skills or
Upon granting of the 30% The employee involved, and knowledge not readily available
ruling, a maximum of 30% his/her spouse, can on the Dutch labor market
of an employee’s gross exchange their foreign (specific expertise). The specific
income from current drivers’ license for a Dutch expertise is assessed on the
employment is considered driver’s license without basis of a (taxable) salary norm.
to be a reimbursement for taking a Dutch driving test. When an employee meets this
extraterritorial costs and salary requirement, he is in
can therefore be Conditions principle deemed to meet the
reimbursed tax free (i.e. condition of specific expertise.
regardless of the actual 64. Please find below the most The following three salary
extraterritorial costs recent conditions under which requirements can be applicable:
incurred). This means that the 30% ruling can be applied:
if the conditions of the 30% General (taxable) salary
The employee should be norm: EUR 37,743 (or EUR
ruling are met, the assigned to the
employee will only be taxed 53,919 including full 30%
Netherlands, or recruited allowance);
on 70% of his employment from abroad for the
income. This will result in a purpose of employment in Masters (Msc) younger
substantially reduced the Netherlands (i.e. than 30 years of age: EUR
effective tax due (i.e. the inbound employee criteria); 28,690 (or EUR 40,986
effective maximum rate is including full 30%
reduced to 36.2% (70% x The employee must be allowance);
51,75%)). employed by a Dutch
resident employer or a Scientific personnel,
The employer is allowed to foreign employer who is a researchers and (specialist)
reimburse school fees wage tax withholding agent physicians under training of
relating to the education of in the Netherlands; designated educational
the employee's child(ren) at institutes: no salary norm.
an international school free The employee must have
of Dutch tax; specific skills or knowledge 66. In addition, the specific
not readily available on the expertise should still not or
The employee can opt to be Dutch labor market ('the hardly be available on the
"partially liable to Dutch specialist test'); Dutch labor market. The
16 People and Organisationscarcity of the expertise may be company. However, the Dutch the 30% ruling in 2019 or 2020
checked for certain specific Supreme Court ruled on due to this new legislation,
groups of employees where the October 12, 2007 that, provided transitional law will be
salary level is not a sufficiently that all conditions are met, a applicable. In case of employees
distinctive criterion for specific supervisory board member who have used the 30% ruling
expertise. could be allowed to benefit from for five years or longer in 2019
the 30% ruling, as supervisory or 2020, transitional law of two
PhD Graduates board members are in most years maximum will be
67. If university doctorates move to cases treated as employees for applicable. The ruling will end
the Netherlands (or a country Dutch wage tax purposes. as of 1 January 2021 at the
However, as of 1 January 2017 latest (i.e. unless the original
within the 150 km radius from
the Dutch country borders) to opting-in is recuired for end date would be reached
obtain their PhD and start to supervisory board members to earlier). In case of employees
still benefit from the 30% who have not yet used the 30%
work in the Netherlands
afterwards, they can in ruling, as supervisory board ruling for five years in 2019 or
principle not benefit from the members are as of January 1, 2020, the end date of their
2017 no longer treated as eiligibility for the 30% ruling is
30% ruling, as they cannot be
considered as inbound employees. As of 1 January reduced with three years. For
employees for the 30% ruling 2018 non executive directors of some expats this means that
a one tier board of a listed their 30% also ends as of 2021.
(i.e. they are not posted or
recruited from abroad). company are also no longer
treated as employees and also 71. The period for which
However, a specific exemption individuals qualify as employee
applies in their case, allowing need opting-in to benefit from
the 30%-ruling. in the meaning of the Dutch
them to obtain the 30% ruling if Wage Tax Act is considered a
they take up a Dutch Period of validity deemed period of work for the
employment within one year purpose of reduction rules.
after obtaining their PhD. For 69. As of 1 January 2019, the With this rule, it is avoided that
completeness’ sake it is noted maximum term of the 30% (statutory) directors and
that university doctorates still ruling is reduced from eight to members of the supervisory
need to meet the salary norm, five years. The ruling will be board of Dutch companies, who
which depends on their age applicable as long as the in the past have benefitted from
(younger than 30 or not) conditions are met. Periods of the 30% ruling, can obtain the
and/or where they will be previous stay and employment ruling in the future again whilst
working (educational and in the Netherlands during the only a reduction is applied on
research institutes or other). last 25 years are deducted from days physically spent in the
the maximum duration period Netherlands.
Supervisory board of the 30% ruling. This rules out
members almost all Dutch national 72. Please note the tax free 30%
employees who return to the allowance can only be paid
68. Until October 12, 2007
members of the supervisory Netherlands at some stage in during the period the 30%
board of a Dutch entity were their international career. ruling is applicable. Based on
the current legislation, for
not able to benefit from the 70. The five years term will also
30% ruling, as they were not inbound assignees the
apply to existing cases. For applicability of the 30% ruling
considered employees of the existing expats that would lose
Global Mobility Country Guide (Folio) 17ceases on the last day of the employees pay themselves are Tax and social security
wage period following the not tax deductible. equalization payments; and
period in which the employee’s
Dutch employment ends (i.e. Reimbursements for losses
for most employees on the last on the sale of assets due to
Other reimbursements and the transfer.
day of the month following the allowances
month in which the Dutch 76. In addition, an employer may
employment ends). Please note 74. As mentioned, under the 30% reimburse certain expenses tax
that a lower Dutch court in 2015 ruling, the employer is allowed free if they are incurred wholly
has made the judgement that to reimburse a maximum of because of the expatriate's
the applicability of the 30% 30% of the employee's salary employment outside the
ruling also ceases when the from current employment country of origin. The actual
employer suspends the (excluding 30% allowance) tax moving expenses and, in
employee from active duty, free as a reimbursement for addition, an amount of EUR
predecing the formal end of the extraterritorial expenses 7,750 can be reimbursed tax
employment.This has effect on incurred. Any other free. Examples of other tax free
the application of the 30% reimbursement of actual expenses are:
ruling on the remuneration extraterritorial expenses by the
during this period and employer to the employee in Professional expenses
potentially also for the potential addition to the 30% allowance incurred on business trips;
(future) continuation of the will be considered as taxable
ruling with a new employer. income (or should be deducted Limited business mileage at
from the 30% tax free EUR 0.19 per kilometer;
School fees allowance). If the actual and
73. When the 30% ruling is extraterritorial expenses
Professional education
granted, the actual cost of incurred are higher than 30% of expenses otherwise
attendance at an international the employee's total salary, it incurred in connection with
primary or secondary school, might therefore be more
employment.
reimbursed by the employer, beneficial not to apply the 30%
will not be considered as ruling and to reimburse the
taxable wage to the employee, actual expatriate expenses
instead. Wage withholding tax
provided that the costs are
limited to tuition fees and if 75. Allowable business expenses 77. The 30% ruling is granted on a
arranged by the school, (not being extraterritorial case-by-case basis. The
transport. A Dutch school with expenses) can be reimbursed application must be filed with
an "international stream" also the Dutch tax authorities within
tax free in addition to the 30%
qualifies as an international allowance. The following four months after the start of
school if the school is in payments do not qualify as the Dutch employment in order
principle only available for for the ruling to be applicable as
allowable business expenses
children of employees working and are considered as taxable of the start date. If the
outside their home country. reimbursements and benefits: application is filed after the four
The maximum tax-free term of months period, the ruling (if
reimbursement is also set at five Foreign-service premiums; granted) will be applicable as of
years. School fees that the month following the month
18 People and Organisationin which the application was advice should be sought on a
filed. If the foreign employee is case by case basis in this
assigned to the Netherlands to respect. The 30% ruling may
work for a foreign employer also have an impact on the
that does not have sufficient amount of Dutch social security
substance in the Netherlands contributions due (if applicable)
(for tax purposes), then the and the build-up of Dutch social
foreign employer should apply security entitlements of the
be appointed as a wage tax expatriate.
withholding agent by the Dutch
tax authorities before filing the Similar to resident and non-
application for the 30% ruling. resident individuals, expatriates
who qualify for the 30% ruling
Foreign tax relief may also be subject to other
taxes. The most important of
Expatriates covered by the 30% these taxes are:
ruling who reside in the
Netherlands are liable to tax on Inheritance and gift tax;
their worldwide employment
income. Consequently, if they Real estate transfer tax;
receive employment income which, Real estate tax; and
under a tax treaty, is liable to tax in
another country, foreign tax relief Road tax.
can be claimed. Expatriates covered
by the 30% ruling who do not reside Information about these taxes is
in the Netherlands are only liable to summarized further on in this
Dutch tax on the portion of their brochure.
employment income that relates to
activities actually carried out in the
Netherlands. Kindly note that
applying the 30% ruling may have
an impact on the relief for double
taxation that the non-resident
employee is eligible for in the home
country. Also note that special rules
apply to US nationals, residing in
the Netherlands who are covered by
the 30% ruling.
Other matters
78. The 30% ruling may have an
impact on the amount of
pension rights which can be
built-up tax free while working
in the Netherlands. Expert
Global Mobility Country Guide (Folio) 19The Dutch Social 81. The national insurance Dutch health insurance. This
Security System contributions paid by an means that the individual
employee are not deductible should conclude a health
General
from his taxable income. insurance with a Dutch health
79. The Netherlands has an National insurance insurance company. The
extensive compulsory social contributions and income taxes employer's contribution to the
security system, including are included as a single tax in Health Insurance Act
national health insurance and the first and second income tax (amounting to 6.95 %) is paid
employee’s insurances. brackets (see Appendix A). on a maximum amount of EUR
Employees only pay 55,927 on an annual basis
Dutch employee’s (maximum amount is EUR
contributions with respect to
insurance schemes 3,886.93).This contribution
the national insurance and the
Dutch health insurance. 82. Dutch employee’s insurance should be processed via the
payroll. This amount does not
schemes are provided for in the
Dutch national insurance need to be processed via the
following legislation:
individuals’ pay slips and does
80. Under Dutch law, the national not constitute taxable income
Unemployment Insurance
insurance schemes cover all for the employee anymore. In
Act ("WW");
residents of the Netherlands, addition, the employee should
regardless of their employment Occupational Disability pay a fixed contribution per
status. In general, non- Insurance Act ("WIA"); year (the so-called "nominale
residents are covered if they are premie") per adult to the health
employed in the Netherlands Sickness Benefits Act
insurance company. This
and if their employment income ("ZW");
amount varies per health
is subject to Dutch wage insurance company (average for
83. Generally speaking, no
withholding tax. The national 2019: EUR 1,420 and an own
employee’s insurance
insurance schemes are provided contribution of EUR 385).
contributions are due if
by the following legislation:
activities are performed in the
General Old Age Pensions Netherlands for a period not
Act ("AOW"); exceeding six months, provided
that they are performed by a
Dependants Benefits Act non-resident employee under
("ANW"); an employment contract with a
non-resident employer. This
General Act for Long Term
exemption is not applicable if
Care (“WLZ”);
the EU Regulation or a social
General Child Benefit Act security treaty is applicable.
("AKW").
Dutch Health Insurance Act
84. According to the Health
Insurance Act, an individual,
who is mandatory covered by
the Dutch social security
system, should conclude a
20 People and OrganisationEU/EEA nationals continue to apply the old EU Some social security treaties also
Regulation 1408/71 for third apply to third-country nationals and
85. EU rules apply to the temporary country nationals. Please note to family members. We recommend
assignment of an employee that Denmark has not adopted that you check the treaty provisions
from one EU* country to the old Regulation for third in each individual case.
another (under EU Regulation country nationals and will not
883/04). The rules direct that, adopt the new Regulation In Appendix D you can find an
under certain conditions, the either. overview of countries with which
employee remains subject to the the Netherlands has concluded
social security system of his Other nationals social security treaties.
home country, provided that
the duration of the transfer 88. Non-EU/EEA or Swiss *EU = Austria, Belgium, Bulgaria,
does not exceed 24 months. nationals** employed in the Croatia, Cyprus, Czech Republic,
This is an exception to the main Netherlands are covered by the Denmark, Estonia, Finland,
rule that employees are Dutch social security system. France, Germany, Greece,
compulsorily covered under the However, social security Hungary, Ireland, Italy, Latvia,
social security system of the agreements between the Lithuania, Luxembourg, Malta,
country in which they work. It Netherlands and some other Poland, Portugal, Romania,
is possible to extend this countries may entitle the Slovakia, Slovenia, Spain, Sweden,
coverage for a period of up to employee to an exemption from The Netherlands and the United
five years (in general, depends paying Dutch social security Kingdom.
per country). Special rules contributions. This relief is
similar to the provisions for an **EEA = European Union plus
apply to employees who work in Norway, Liechtenstein, and
more than one EU Member EU/EEA or Swiss national.
Iceland.
State.
86. The EU Regulation 883/04 has
entered into force on May 1,
2010. This Regulation is
applicable to all EU countries.
Under certain conditions the
previous EU Regulation
1408/71 remains applicable for
situations which started before
May 1, 2010.
87. The scope of EU Regulation
883/04 is applicable to third
country nationals from
January 1, 2011. This relates
only to moves between EU
countries.
The UK does not participate in
this new Regulation for third
country nationals. They
Global Mobility Country Guide (Folio) 21Step 3:
What to do before you arrive in the
Netherlands
Immigration formalities in Application for a (MVV) South Korea;
the Netherlands visa
United States of America;
89. A Dutch immigration procedure 90. In order to enter the
must be started for foreign Netherlands third country Vatican City.
nationals who want to reside nationals may be subject to 91. Foreigners who have the
and/or work in the entry visa requirements, nationality of these countries
Netherlands. In general, a depending on nationality and may come to the Netherlands
Dutch employer needs to obtain duration of intended stay. In
without an MVV. Their
a work permit to arrange legal case a foreigner comes to the residence permit application
employment in the Netherlands for a stay shorter can be started while they are
Netherlands. Depending on the than three months a short term
still residing abroad or shortly
nationality and duration of (Schengen) visa may be after their arrival in the
intended stay, an entry visa required. When coming to the Netherlands in case their
and/or residence permit are/is Netherlands for a period longer
intended stay exceeds three
required. For a stay of more than three months a long term
months.
than four months in a entry visa (in Dutch so-called
timeframe of six months, MVV) may be required prior to 92. In case the company of the
registration at the town hall of arrival in the Netherlands. A foreign national is registered as
the municipality of residence is visa is an annotation, placed in an recognized sponsor and the
required. EU/EEA and Swiss the foreigner's passport, foreign national is in possession
nationals are exempted from enabling the foreigner to enter of a valid residence permit
the entry visa, work and the Netherlands. The nationals issued by another Schengen
residence permit requirement. of the following countries are country no long term entry visa
exempted from the MVV (MVV) is required.
requirement:
93. Foreigners must obtain an entry
Australia; visa prior to enter the
Netherlands from the Dutch
Canada; embassy/consulate in the home
Japan; country or from the country
where the foreigner has legal
Monaco; residence (e.g. be in the
possession of a residence
New Zealand; permit and passport valid for at
22 People and Organisationleast six months at the moment migrant residence permit have found a job after this
of collection of the entry visa). procedure, the employer is not search year in the Netherlands,
required to arrange for a their employer can apply for a
94. The regular procedure for the separate work permit for the residence permit as a Highly
application of a MVV has to be employee. Instead, the Skilled Migrant, if the gross
started simultaneously with the employer applies for a wage of EUR 2,364 per month
application of a work permit residence permit that will (EUR 2,553.12 including 8%
and residence permit. In entitle the employee to work holiday pay) (figure 2019) is
general a MVV will be issued and reside in the Netherlands. met.
after a work permit has been For the highly skilled migrant
granted. procedure, it is not relevant 101. The spouse/partner can also
whether the employee is already work in the Netherlands if the
95. MVV applications in employee holds a highly skilled
combination with a work permit employed by the Dutch
company or not or hired from migrant permit. The
will in principle be granted partner/spouse can obtain a
within six to eight weeks of the abroad as a new recruit by a
Dutch company. The highly dependent highly skilled
date that documents have been migrant permit which allows
skilled migrant procedure can
received by the authorities. employment without a
only be used if the employer has
In cases other than work, obtaining the status of an acknowledged separate work permit.
a MVV can take up to three months. sponsor issued by the Dutch
II. Highly Skilled Migrant
Immigration Authorities.
Application for a work work permit procedure
permit 99. For immigration purposes, a 102. If the employee will have to
person qualifies for this
96. Dutch employers who hire a work in the Netherland for less
procedure if the intended stay than 90 days, a work permit as
foreign employee must obtain a in the Netherlands exceeds
work permit for him/her from a highly skilled migrant can be
three months and the salary applied for, provided that all
the first day he/she will work in threshold is met. In 2019 the conditions are met. The
the Netherlands (see 'Penalties gross monthly threshold is EUR
for non-compliance' under processing time of the
4,500 (EUR 4,860..00 application is approximately 2
102). No work permit is including 8% holiday pay) or to 3 weeks. In order to be able
required for employees who are EUR 3,299 (EUR 3,562.92
nationals of the EEA and to make use of this possibility,
including 8% holiday pay) for
Switzerland excluding Croatian the employer has to be an
applicants under 30 years of acknowledged sponsor and the
nationals. age. The processing time of the employee must fulfil a key
application is approximately 2
97. There are several work permit position or must have at least a
to 3 weeks. Bachelors degree.
procedures, under paragraphs I
– V the most common The gross monthly salary
procedures are outlined. 100. For recently graduated threshold for this work permit
students, who studied in the is EUR 4,500 (EUR 4,860.00
I. Highly skilled migrant including 8% holiday pay) or
Netherlands, possibilities exist
residence permit EUR 3,299 (EUR 3,562.92
to obtain a residence permit to
procedure including 8% holiday pay) for
look for a job as a highly
skilled migrant for a period of applicants under 30 years of
98. This is the most commonly used
one year (starting after their age (figures 2019).
procedure in the Netherlands.
Under the highly skilled graduation). As soon as they
Global Mobility Country Guide (Folio) 23III. Intra company transfer Dutch education. Before the IV. Exceptions and special
start of the apprenticeship, the rules on work permits
103. The conditions for the intra student should have a valid
company transfer procedure Dutch residence permit for 108. Exception 1: EEA and Swiss
include the following: study and the employer should nationals do not require a
have a contract governing the work permit.
The foreign employee
must be assigned from a apprenticeship signed by the 109. Exception 2: spouses and
university, the student and the
company abroad to the partners - actually living
Dutch company within the employer. together - of a Dutch or
same global group; V. Regular procedure European employee in the
Netherlands can obtain a
The international group of 105. In case no exceptional residence permit for the
companies need to have an application procedures are purpose "stay with
annual turnover of at least applicable, the procedure for partner/husband". The
EUR 50 million; new recruited employees most residence permit should
The foreign employee is in likely needs to be followed. include the notification that no
the possession of at least a This is a more time-consuming work permit is required.
procedure because of the
bachelor degree, has a 110. Exception 3: if the foreign
management or key prerequisites of prior
notification of the vacancy and employee is in the possession
position and has a monthly of a residence permit under
gross wage of at least EUR fulfilling recruitment efforts.
the heading 'Arbeid vrij
4,500 (EUR 4,860.00 106. The employer should actively toegestaan', no work permit is
including 8% holiday pay) investigate whether personnel required. This type of
(figure 2019); is available on the EEA labor residence permit is open for
In addition, trainees can market. First of all, the employees that have:
under certain conditions employer should therefore
advertise the vacancy in An uninterrupted
also be assigned on an residence permit and work
intra company base. A several newspapers
throughout the EEA and permit for at least five
traineeship program years, directly preceeding
professional journals, during a
outlining the tasks and the application for this
objectives must then be period of five weeks, and fulfill
sufficient additional new residence permit; or
available and a gross
monthly wage must be recruitment activities. A permanent residence
paid of EUR 3,299 (EUR 107. Secondly, the employer has to permit.
3,562.92 including 8% report the job vacancy with the
holiday pay, figure 2019). 111. Other exceptions: the
Dutch employment authorities following individuals do not
IV. Students (“UWV Werkbedrijf”) for at need a work permit (list is not
least five weeks, or for three exhaustive):
104. Employers are no longer months when the labor market
required to obtain a work for this kind of positions is Foreigners that reside
permit for students who, as very tight. We also recommend abroad and who are
being a part of their study at a the employer to report the job incidentally in the
Dutch institution, must follow vacancy with EURES Netherlands for business
a mandatory apprenticeship in (European Employment purposes provided that the
the Netherlands during their Services). employee stays in the
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