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Netherlands Expat taxes





Posted: June 16th, 2014
The Dutch income tax law does not define the term 'resident' and therefore resident or non-resident status is decided on a case by case basis. The most important factor in determining residency status is an individual's economic tie with The Netherlands; this includes the family home, employment in the country and entry into the local authority register.

There is, however, a special regime for expatriate workers in the Netherlands, although changes have recently been introduced which has watered down its attractiveness somewhat. Under this scheme, an expatriate can apply for a 30% tax-exempt allowance. From January 1, 2012, a minimum salary of EUR50,000 is required to benefit from the 30% exemption rule. Those classed as ‘academics’, which include scientists and researchers at educational institutions, are exempt from the salary threshold, which is index-linked and will be revised annually.

The chief condition which the employee must satisfy is that he has some specific expertise which is not readily available in Holland.

If the application is successful the employee can elect to be treated preferentially for a period of up eight years (reduced from a period of 10 years prior to January 1, 2012). This period will be reduced if the applicant has had previous spells of residence and employment in the Netherlands in the previous 25 years. Periods of employment outside of the Netherlands, but for a Dutch company, will also fall under the scope of the 25 year ‘look back’ period. An employee is generally no longer eligible to continue benefitting from the 30% scheme after the employment period has ended.

Initially, the Dutch government announced plans to tighten the 30% tax break within the framework of the government’s 2012 tax plan, to ensure that only expats with income in excess of EUR70,000 would benefit from the provision and to ensure that employees from neighbouring Belgium and Germany (those less than 150km from the Dutch border) would also no longer qualify. These provisions were amended in subsequent versions of the bill as it progressed through parliament in response to protest from companies with a high demand for expat workers. In the latter case, prior to their employment in the Netherlands, an employee now must have resided outside the 150km boundary for two-thirds of a 24 month period.



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