The 30% facility may end with application of 150-kilometre criterion
15 February 2018 - An employee may be eligible for the 30% allowance if the employee was recruited outside the Netherlands or seconded from another country to work in the Netherlands. If an employee is seconded to the Netherlands or recruited from abroad, this can involve additional costs known as extraterritorial costs. An employer can reimburse those costs tax-free based on itemised expenses statements. Another option is to use the 30% facility to issue a fixed tax-free allowance in the amount of 30% of the wage (without having to furnish supporting documents).
Employees recruited from abroad who already applied the 30% facility on 1 January 2012, are subject to an interim review within five years of the date of awarding the 30% facility. This requires compliance with legislation and regulations that are applicable at the time of the review. Therefore, compliance with the 150-kilometre criterion should be reviewed. This criterion means that an employee should have lived at least 150 kilometres (as the crow flies) from the Dutch border for at least 16 of the 24 months prior to his employment in the Netherlands. This effectively excludes employees from Belgium, Luxembourg and parts of France and Germany from the 30% allowance. If, at the time of the review, it becomes apparent that this requirement was not met, the 30% allowance ends. If the tax free allowance is continued, payroll tax is payable on the allowance.
Supreme Court
The application of the interim review has been submitted to the Supreme Court. The Supreme Court ruled that it was the legislator’s intention to apply the new 150-kilometre criterion to the interim review after five years. The text of the decision that includes the 30% allowance does not prejudice such an interpretation according to the Supreme Court. The Supreme Court also rejected relying on the principle of legitimate expectation – the Tax and Customs Administration had issued a decision regarding the application of the 30% allowance to the employee for a period of ten years.
For employees who used the 30% allowance on 1 January 2012 this means that the interim review after 5 years should assess whether they complied with the 150-kilometre criterion at the time of recruitment. Therefore, it is important to check whether you have any employees who were using the 30% allowance on 1 January 2012 and still apply this without a review against current legislation and regulations. This may have major consequences.
Salary requirement
If a 30%-allowance decision was issued after 1 January 2012, there is no review after 5 years, because since that date the allowance is subject to a continuous review. This means that the application of the 30% allowance should comply with current legislation and regulations at any time. This makes compliance with the salary requirement in particular an important issue. The salary requirement means that the incoming employee must have a gross salary, excluding the 30% allowance, of at least €37,296. For people younger than 30 with a Master’s title, the salary requirement is € 28,350 in 2018. This salary requirement must be reviewed on an annual basis. Therefore, we recommend that you determine whether your employees comply to ensure you do not run the risk of subsequent levies.
Mazars can assist with reviewing the 30%-allowance conditions and in many cases we can also provide assistance with applying for or optimising the use of the 30% allowance.
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Marco Zimmerman Director
(Inter)national Payroll Taxes
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