In the Tax Plan to be submitted on Budget Day 2018, the government will propose reducing the 30% facility from eight to five years, effective 1 January 2019. This reduction would apply to both new and existing cases. Besides reducing the maximum period for the 30% facility, the proposal would shorten the optional scheme for partial non-resident tax liability by three years.

What does the 30% facility entail?

To get foreign workers with exceptional qualities (specific expertise) that are scarce in the Dutch labour market to come to the country, the Netherlands holds out an appealing incentive: the 30% facility. Briefly stated, companies may, under certain conditions, pay out, tax free, a fixed rate of 30% of the taxable salary to employees they have recruited abroad. This tax free compensation is intended to cover the employees’ extra costs on account of their temporarily residing outside their countries of origin in connection with the employment. These costs are referred to as ‘extraterritorial costs’.

Not every foreign worker is eligible for the 30% facility. For purposes of demonstrating the employee’s specific expertise, an income standard, which is indexed annually, applies. This year, the standard is as follows:

  • For employees younger than 30 with a Dutch or equivalent foreign Master’s degree, the taxable annual salary must be at least €28,350.
  • For other employees, the taxable annual salary must be at least €37,296.

Note: The aforementioned minimum amounts are exclusive of the untaxed compensation under the 30% facility. A simplified example of how the income standard should be calculated is given below.


  • Employer wants to hire highly skilled migrant
  • Gross salary: €45,000
  • Company car: listed value of €50,000, with 22% addition to salary for tax purposes
  • Net expense allowance: €100 per month


  • Gross salary: € 45.000
  • Addition for car: € 11.000
  • Taxable salary before application of 30% facility: € 45.000 + € 11.000: € 56.000
  • 30% allowance: 30% * € 56.000: € 16.800
  • Taxable salary: € 56.000 – € 16.800: € 39.200

The employee satisfies the income standard here.

Employees performing academic research for certain institutions and doctors training to be specialists do not have to satisfy an income standard.

For the 30% facility to apply, the employer and employee must file a joint request with the Dutch Tax and Customs Administration. The Tax and Customs Administration will approve the request if all of the conditions have been met.

Proposed changes in the 30% facility as from 1 January 2019

Duration of the 30% facility

Research has shown that reducing the duration of the facility from eight to five years will make the facility more efficient. The reason is that, as the research found, 80% of the workers who are eligible for the 30% facility do not utilize the facility for more than five years. Moreover, workers who utilize the facility for more than five years typically take up residence in the Netherlands for the long term. The government believes that the facility is not intended for this. Specifically, the facility is designed to compensate the extra costs for the workers’ temporarily residing outside their countries of origin.

It is noteworthy that the proposed change to the 30% facility would also affect employees who are already currently utilizing it. The proposal does not include a transitional scheme. Consequently, the remaining period from 1 January 2019 would have to be determined for any workers utilizing the 30% facility.

Optional scheme for partial non-resident tax liability

Employees residing in the Netherlands and qualifying for the 30% facility enjoy an additional tax benefit, too. In particular, these employees can opt for ‘partial non resident tax liability’. By choosing this option, employees are partly considered non resident taxpayers for income tax purposes.

Thus, the employees’ income from a substantial interest (Box 2) and from savings and investments (Box 3) is determined in accordance with the rules applicable to non resident taxpayers. For example, these workers do not pay any tax in the Netherlands on dividends received from foreign companies. Likewise, assets which the workers have accumulated (for instance, savings and investment portfolios) are not subject to Dutch taxes.

School fees

Yet another benefit of the 30% facility is that it enables employers to furnish extraterritorial costs for school fees to employees tax free. The school fees must be for an international school or the international section of a regular school, and this scheme is mainly intended for the children of employees working outside their countries of origin. For an employee to qualify for this, the Dutch Tax and Customs Administration must grant the request for application of the 30% facility. Given that application of the 30% facility is necessary to grant an allowance for school fees, the option of an allowance for school fees would similarly be reduced from eight to five years.

If you would like to know more about the 30% facility and the proposed changes from 1 January 2019, please contact us. We’re happy to help you.

Written by:

Belastingadviseur Thomas Drost

Thomas Drost LL.M.

Tax advisor and global mobility specialist