Employment in the Netherlands - 2015

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Employment in the Netherlands
Conditions of employment, tax and social
security aspects
Edition 2015
Editor Hans van Ruiten
EmploymentintheNetherlandsEdition2015
15-01-EN-EIN
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Employment in the Netherlands
Conditions of employment, tax and social security aspects
Edition 2015
Editor
Hans van Ruiten

© Loyens & Loeff N.V. 2015
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3loyens & loeff Employment in the Netherlands 2015
Foreword
This brochure deals primarily with the conditions of employment, as well as the tax
and social security aspects of employment in the Netherlands. The employee may
or may not be immigrating into this country. Both cases are discussed.
The contents of this publication are based on the laws as operative on 1 January
2015.
We have elected a format in which the topics are outlined rather than discussed in
detail. Because of this approach, we advise you to consult your tax advisor if you are
considering taking measures that may have tax implications. Although the brochure
has been compiled with the greatest care, Loyens & Loeff cannot accept any liability
for the consequences of the use of its contents without prior consultation.
Loyens & Loeff N.V.

4 loyens & loeff Employment in the Netherlands 2015
CONTENTS
Foreword 3
1 Conditions of employment 9
1.1 Introduction 9
1.2 Applicable law 9
1.3 Separate regime in case of dismissal 10
1.4 Particular issues of Dutch labour law 11
1.5 Residence permit and work permit 15
1.5.1 Residence permit 15
1.5.2 Work permit 15
1.5.3 Highly skilled migrant workers 17
1.6 Legal residence wealthy foreigners 18
1.7 Registration with the municipal authorities 18
1.8 Driving licence 18
2 Taxation 23
2.1 Residence 23
2.2 Resident taxpayers 24
2.2.1 Income tax 24
2.2.1.1 Box 1: Income from work and home 24
2.2.1.2 Box 2: Income from substantial shareholding 26
2.2.1.3 Box 3: Income from savings and investments 26
2.2.1.4 Partner rule 26
2.2.1.5 Tax rates 27
2.2.1.6 Tax rebates 27
2.2.2 Wage tax 28
2.2.2.1 Employment income 28
2.2.2.2 Expenses 30
2.2.2.3 Wage tax withholding obligations 30
2.2.3 Gift tax, inheritance tax and transfer tax 31
2.2.4 Real estate transfer tax 32
2.2.5 Import duties, VAT and excise duties 32
2.2.5.1 Moving from outside the EU to the Netherlands 33
2.2.5.2 Moving from another EU Member State to the Netherlands 33
2.2.6 Registration tax on private cars and motorcycles (BPM) 33
2.2.7 Motor vehicle tax 34

5loyens loeff Employment in the Netherlands 2015
2.2.8 Real estate tax/other charges 34
2.2.9 Double taxation 35
2.3 Non-resident taxpayers 37
2.3.1 Income tax 37
2.3.1.1 Limited tax liability 37
2.3.1.2 Sources of taxable income 37
2.3.1.3 ‘Qualifying non-resident taxpayers’ regime as of 2015 38
2.3.1.4 Tax rates 39
2.3.1.5 Tax rebates 40
2.3.1.6 Partner rule 40
2.3.1.7 Tax treaties 40
2.3.2 Wage tax 40
2.3.2.1 Employment income 40
2.3.2.2 Expenses 42
2.3.2.3 Wage tax withholding obligations 43
2.3.3 Gift tax and inheritance tax 44
2.3.4 Real estate transfer tax 45
2.3.5 Real estate tax/other charges 45
2.3.6 Double taxation 45
2.4 The 30%-ruling 47
2.4.1 Introduction 47
2.4.2 The conditions for the 30%-ruling 47
2.4.3 Consequences of the 30%-ruling for wage tax purposes 49
2.4.4 The non-taxable 30%-allowance 50
2.4.4.1 Calculation of the 30%-allowance 50
2.4.5 Impact of the 30%-ruling on social security and pensionable base 50
2.4.6 Partial non-resident tax liability 50
2.4.7 Summary 51
2.4.8 Checklist application 30%-ruling 52
2.5 General provisions 53
2.5.1 Social security/tax registration number (BSN) 53
2.5.2 Tax return, tax assessment, objection and appeal, preliminary tax
refund 53
2.5.3 Interest 54
2.5.4 Penalties 54
3 Social security 57
3.1 Introduction 57
3.2 National Insurance Schemes 57
3.2.1 General Old Age Pensions Act (‘AOW’) 57
3.2.2 Surviving Dependants Act (‘ANW’) 57

6 loyens loeff Employment in the Netherlands 2015
3.2.3 Long term care Act (‘WLZ’) 58
3.2.4 General Child Benefit Act (‘AKW’) 58
3.2.5 National Insurance Schemes – contributions 58
3.3 Employee insurance schemes 58
3.3.1 Sickness Benefits Act (‘ZW’) 59
3.3.2 Work and Income according to Earnings capacity Act (‘WIA’) 59
3.3.3 Unemployment Insurance Act (‘WW’) 60
3.3.4 Employee insurance schemes – contributions 60
3.4. Health Care Insurance Act (‘ZVW’) 61
3.5 Benefit Entitlement (Residence Status) Act (BEA) and Benefit Restrictions
(Foreign Residence) Act 61
3.6 Social security authorities 62
3.7 Secondment from another EU Member State 62
3.7.1 Conditions for secondment 62
3.7.2 Temporary workers 63
3.7.3 Working in more than one country; exceptions 63
3.7.4 Formalities 64
3.8 Secondment from another treaty state 64
3.9 Secondment from a non-treaty state 65
3.10 Family members 65
4 Matrimonial property law and inheritance law 69
4.1 Matrimonial property law 69
4.1.1 Married in the Netherlands 69
4.1.2 The matrimonial property law in the Netherlands 69
4.1.3 Marriage and international private law 69
4.2 Inheritance law 70
APPENDIX I Countries to which a double taxation treaty is applicable 73
APPENDIX II Scheme: social security treaties and the countries the treaties
can be applied to 74
APPENDIX III Scheme: terms for secondment 75
APPENDIX IV Scheme: particularities bilateral and multilateral treaties 76
Offices of Loyens Loeff N.V. 77
CONTACTS PRACTICE GROUP
employment tax and employment law 79
Authors80

1 Conditions of employment
1.1 Introduction
Employment in the Netherlands, either through a secondment or direct employment
with a Dutch employer, will often have consequences in the field of employment law.
A secondment to the Netherlands can affect the terms and conditions of employment
as agreed to by the employer and the employee. The duration of the secondment is
an important factor. In most cases, the sending company has formulated a second-
ment policy that clearly states what is considered to be a short secondment and
what is considered to be a long secondment (the latter being the true expat second-
ment). This chapter deals with several of the terms and conditions of employment
and a number of other subjects that should be borne in mind by the employer and
employee in the case of a secondment to the Netherlands.
1.2 Applicable law
Usually, an employee and his employer have an employment contract that is gov-
erned by the law of their home country. If the employee is seconded to work in the
Netherlands, this contract can remain governed by the law of the home country, but
will be partly governed by Dutch law. Certain rules of Dutch law will immediately
apply to the employment contract. As from the first day of secondment to the Nether-
lands, the Terms of Employment (Cross Border Work) Act (“Wet Arbeidsvoorwaarden
Grensoverschrijdende Arbeid, WAGA”) applies to all foreign individuals who work
in The Netherlands. The WAGA is based on the EU seconded Worker Directive of
1996. The WAGA also applies to employees from non-EU countries. Pursuant to the
WAGA, the provisions of Dutch law relating to the topics mentioned below apply to
the employment agreement of each individual who works in the Netherlands. The
Dutch law provisions indicated in the WAGA are considered minimum protection.
Consequently, these Dutch provisions will be superseded by provisions of the appli-
cable law if the latter are more favourable for the employee.
The WAGA refers to provisions on the topics below contained in Dutch legislation
and in Collective Labour Agreements, which have been declared generally binding
in the Netherlands.

These topics are:
a) maximum working hours and minimum resting hours;
b) maximum number of vacation days during which the employer has the obligation
to continue the payment of salary;
c) minimum wage, including payments for overtime, excluding additional company
pension schemes
d) conditions for the hiring out of employees;
e) health, safety and hygiene at work;
f) protective measures regarding employment conditions and working conditions
for particular employees;
g) equal treatment of men and women, as well as other subjects of non-discrimin
ation.
Furthermore, the longer an employee works in the Netherlands, the more Dutch law
provisions there are that apply to the contract. These can be other provisions than
the ones mentioned above, as long as they are mandatory rules of Dutch law that
offer the employee better protection than similar provisions contained in the law of
the home country.
1.3 Separate regime in case of dismissal
A separate regime applies to the Extraordinary Labour Relations Decree 1945
(‘Buitengewoon Besluit Arbeidsverhoudingen, BBA 1945’) which provides for the
need to obtain permission from the relevant authorities prior to giving notice of ter-
mination to an employee. The possible applicability of this Decree is based on a
separate scope-rule, which differs from the rule for determining the applicable law. As
a rule of thumb it can be said that if it is foreseeable that a foreign employee who has
been dismissed will return to the Dutch labour market (i.e. apply for a new job in the
Netherlands), the Decree is applicable, which means that the employer has to obtain
permission from the Employee Insurances Implementing Agency (UWV) before he
could dismiss this employee. Since 2010 however, the courts also take into account
whether the specific situation of the dismissed employee differs from his colleagues
who have the protection of the BBA. This means that if the foreign employee has
more or less the same contract and the same position as his Dutch colleagues, the
Decree is applicable to him, as it is to his Dutch colleagues. In practice, we see that
if an employee is living and working outside the Netherlands and does not intend to
come back to the Netherlands after his dismissal, courts say that the BBA does not
apply to these employees.

1.4 Particular issues of Dutch labour law
Under European law, which applies to all EU Member States, all employers who
conduct business in the territory of the European Union have the obligation to notify
the employee, in writing, regarding a number of issues pertaining to the employment
contract. If an employee is to work in another European Member State for a period
exceeding a month, the employer must provide the following information:
• a written employment contract, a letter of appointment and/or a written docu-
ment containing various particulars of the employment agreement or employment
relationship, e.g. the identity of the parties, the place of work, the salary, etc.; the
employment contract, letter of appointment and/or any other written document
should be in the possession of the employee before he leaves his home country;
• the duration of the period of employment abroad;
• the currency in which the salary will be paid;
• if applicable, the social security aspects pertaining to the period of employment
abroad;
• if applicable, the arrangements regarding the employee’s return to his home
country.
There are also a few other issues worth mentioning that are specific to Dutch
labour law, though we will not go into all of them here. The issues that will be briefly
discussed in the following paragraphs are:
a. the trial period;
b. the non-competition clause;
c. sickness and reintegration;
d. liability for accidents and disease at work;
e. the law on dismissal;
f. employment contracts for a definite period of time;
g. the position of the Statutory Director (statutair directeur).
a. The trial period
As from 1 January 2015, the following applies: To a contract of two years or more or
to a contract for an indefinite period of time, a maximum trial period of two months
applies. To an employment contract of more than six months but less than two years,
the trial period in Dutch law is a maximum of one month or for the duration of a
certain specific project. If there is a contract of six months or less, no trial period is
permissible. If the parties agree on a trial period which exceeds one/two months or if
they agree on a trial period in a contract of six months or less, the legal consequence
is that there is no trial period at all. The trial period should be agreed to in writing in
the individual employment contract or in the applicable Collective Labour Agreement.

b. The non-competition clause
If the employer wants to include a non-competition clause, this has to be laid down
in writing in the individual employment contract. The inclusion of such a clause
in a Collective Labour Agreement is not sufficient. If the position of the employee
changes significantly, a new non-competition clause should be drawn up, as this
clause always relates to a specific function.
A non-competition clause can always be moderated by a court regarding its dura-
tion as well as regarding its geographic scope. In order to do this, the employee
must start a legal procedure against the employer. The court cannot moderate a
non-competition clause on its own initiative. As from 1 January 2015, non-compete
clauses can only be concluded in temporary contracts if the employer in the clause
itself also states the reason(s) for such a clause. This means that the employer
explicitly has to motivate for the particular employee why a non-compete clause is
important, regarding the position he/she will fulfil.
c. Sickness and reintegration
In case of sickness of an employee, the employer is obliged to continue payment of
at least 70% of the maximum daily salary and holiday allowance during a maximum
of two years as defined in the Civil Code. The maximum daily salary as defined by
social security legislation is in 2015 about € 197.74 per day. Furthermore, he cannot
dismiss the employee on the grounds that he is ill. The employer and employee are
obliged to cooperate as much as possible on the reintegration of the employee. Ifthe
employee does not cooperate sufficiently on the reintegration, the employer may
discontinue payment of the salary. If the employee continues to be uncooperative,
the employer may dismiss the employee, even before the two years have passed. If
the employer does not cooperate sufficiently, the UWV may, after two years, sanction
the employer by deciding that he has to continue payment of the employee’s salary
for yet another year. During this period, the employer may not dismiss the employee.
d. Liability for accidents and disease at work
If an employee has an accident or develops an occupational disease at work, he can
hold his employer liable. The employer can only avoid liability if he can prove that he
has taken all necessary precautions to avoid the accident/disease, or if he can prove
that the accident/disease is the result of deliberate action or conscious recklessness
of the employee. This is very difficult to prove and over the past ten years there have
been many legal procedures regarding these claims. In most of these cases, the
employer was held liable for the accident/disease at work.

e. The law on dismissals
The Netherlands has a unique regime when it comes to dismissals. If an employee
has an employment contract for an indefinite period of time and there are no urgent
grounds for termination of the employment contract, there are two ways in which an
employee can be dismissed.
The first way is by means of a dismissal permit from the UWV. The procedure for
obtaining such a dismissal permit takes approximately 2 to 4 months, depending on
the question of whether and how the employee defends himself in this procedure.
If the UWV issues a dismissal permit, the employer can terminate the employment
contract in accordance with the terms of notice. These terms of notice vary from 1 to
4 months, depending on the total duration of the employment.
The second way to terminate an employment contract is by means of a court decision.
The employer can ask the court to dissolve the employment contract for serious
cause. If the court dissolves the contract, it can award a redundancy payment in
favour of the employee on the basis of the so-called “cantonal court formula”. This
formula has been developed by the Dutch cantonal judges and calculates the redun-
dancy payment by multiplying the number of years in employment by the gross salary
per month, taking into account a correction factor.
As from 1 July 2015 the following applies: if the reason for dismissal is long term
illness (meaning 2 years or longer) or if the dismissal has an economical background,
the employer can only apply for dismissal at the UWV. If there is any other ground for
dismissal, the employer has to go to the Cantonal Court. Furthermore, the Cantonal
Court Formula will no longer apply. Instead of this, the employer will have to pay a
transition severance (transitievergoeding) if the employment agreement has been for
a period of 2 year or more. Besides this, a court can decide that the employer has to
pay a reasonable severance (billijke vergoeding) if he has acted in a very wrongful
way towards the employee.
f. Employment contracts for a definite period of time
An employer can, within a period of three years at maximum, enter into three con-
secutive employment contracts for a definite period of time with an employee. If this
is followed by a fourth contract, this fourth contract will automatically be considered
to be an employment contract for an indefinite period of time. This does not apply
if there is an interruption of more than three months between two contracts, during
which period the employee neither has an employment contract with the employer
nor works for the employer through a temporary employment agency.
It should be noted that in a Collective Labour Agreement it can be stipulated that the
number of temporary employment contracts can be more than three or that the total
period of temporary employment contracts can be more than three years.

As from 1 July 2015 the following applies: An employer can still enter into three con-
secutive employment contracts for a definite period of time with an employee. How-
ever, the interruptions need to be more than six months, instead of three between
two contracts, during which period the employee neither has an employment contract
with the employer nor works for the employer through a temporary employment
agency. In addition the total period will become two years instead of three.
It is still possible that in a Collective Labour Agreement it will be stipulated that the
number of temporary employment contracts can be more than three or that the total
period of temporary employment contracts can be more than two years. However,
there will be more limitations to such CLA’s than currently is the case.
g. The Statutory Director (statutair directeur)
Under Dutch law, a Statutory Director has a special position. The Statutory Director
may be dismissed or suspended at any time pursuant to a resolution of the corporate
body authorized to appoint the Statutory Director. In general, the general meeting of
shareholders is authorized to dismiss or suspend a Statutory Director. If he is dis-
missed by the authorized corporate body in accordance with the applicable rules, his
employment contract ends. There is no need to obtain the prior consent of the UWV,
nor does the court need to be asked to dissolve the employment contract for serious
cause. When dismissing a Statutory Director, the relevant (statutory) provisions
regarding the convocation and holding of meetings of the authorized corporate body
must be complied with and the Statutory Director should be informed about the reasons
for his proposed dismissal. At the meeting, the Statutory Director must be granted
the opportunity to give his views on (the reasons for) his proposed dismissal. After
the corporate body resolved to dismiss the Statutory Director, the (contractual or
statutory) notice period for termination of the employment agreement must be
observed. A Statutory Director who is dismissed, may request the competent court
to award compensation for his dismissal via a claim for unfair dismissal or cancel
lation of the contract. However, the Statutory Director cannot request the court to
restore the employment relationship.
Under Dutch law, the legal relationship between a Statutory Director and a listed
company cannot be regarded as an employment relationship and, hence, the con-
tractual relationship will qualify as a contract for services. As a result, the Statutory
Director does not have the normal employment law protection against dismissal and
the listed company is not bound by the statutory notice period(s) for termination of
the agreement. Moreover, the Statutory Director will not be able to claim compen
sation for his dismissal via a claim for unfair dismissal or cancellation of the contract.
Whether a notice period must be observed for this purpose will depend largely on
the agreement between the parties.

1.5 Residence permit and work permit
Prior to actually working in the Netherlands, it must be determined whether the
employee is allowed to reside and actually work in the Netherlands, given the restric-
tive conditions aimed at protecting the Dutch labour market.
1.5.1 Residence permit
All foreign nationals, except those from Member States of the European Union and
the European Economic Area (EEA), including Switzerland (and their family mem-
bers), who wish to reside in the Netherlands for a period exceeding three months
(90 days), need a residence permit. In order to be granted a residence permit, a
number of specific conditions must be met. First, it should be determined that the
person does not already have a residence permit. If he claims not to need one, or to
have already requested one, this should be verified before he enters the company’s
employment. A residence permit is normally granted after a work permit has been
granted.
Entry visa
In most cases, those who wish to obtain a residence permit must first request an
entry visa (‘MVV’). This does not apply to nationals of one of the European Union
Member States (including the European Economic Area and Switzerland), Monaco,
Vatican City, the United States of America, Canada, Australia, New Zealand, Japan,
and South Korea. Persons of all other nationalities must request an MVV. An MVV
is a special type of travel visa that is placed in the passport by means of a sticker. It
allows the holder of this passport to enter the Netherlands.
An MVV can only be obtained from the Dutch embassy or consulate in the country in
which the foreign national resides, or in the nearest country in which the Netherlands
has representation. Upon entering the Netherlands, the foreign national must apply
for a residence permit in one of the nine regional front offices of the Immigration and
Naturalisation Service (IND) within three days. If he meets all requirements for stay-
ing in the Netherlands, a residence permit will be granted.
If an MVV is required and a foreign national applies for a residence permit without
first having obtained one, his request will be rejected and he will have to leave the
Netherlands.
1.5.2 Work permit
Work permits are issued pursuant to the Foreign Nationals Employment Act (WAV).
This act contains a number of restrictions regarding the right for foreign nationals to

work in the Netherlands. In principle, a work permit will only be issued if no employee
is available on the EU/EEA market to fill the position.
An employer may not employ a foreign employee to work in the Netherlands without
a work permit. For each employee who is working in the Netherlands without the
required permits, the employer will owe a fine of € 12,000 – regardless of whether
the employer acted in conflict with the law deliberately. Other companies (economic
employer(s)) may also be fined for the same amount, because they will also be
qualified as employer according to the WAV. The main rule is that a work permit
must be requested for each foreign national who wishes to work in employment in
the Netherlands. There are certain exceptions to this rule (see further on).
A work permit must also be obtained for part-time work, jobs aimed at obtaining
work experience, training on the job-positions and volunteer positions. Even if the
employee is recruited from another company, for instance an employment agency,
a work permit must still be requested. At the very least, it should be verified that the
employee has already been issued one. The principal for whom the work is actually
being carried out is responsible for ensuring that the regulations included in the WAV
are complied with.
A work permit is not required for the following categories of persons:
• persons who have a residence permit for the purpose of becoming/being self-
employed. These persons must, however, actually be self-employed and apply
for a residence permit;
• persons who are allowed to stay in the Netherlands on the basis of community
law (i.e. nationals of EU/EEA-countries, including Switzerland, and their family
members). They only need a valid passport to carry out work here;
• persons who have a permanent residence permit, refugees;
• persons who have been exempted by means of an Order in Council. These
include: foreigners who only have come to the Netherlands to work for a very
short period of time, for instance to repair machinery, give lectures, install soft-
ware; and
• foreign nationals who have a residence permit, with an appendix, stating that the
foreign national is permitted to freely carry out work. This appendix is essential.
Although Croatia has been EU member state since 1 July 2013, a work permit is still
required. Croatians do not need a residence permit, however.
Employees who have priority
Pursuant to the WAV, a work permit will be refused if there are employees on the
‘local’ labour market who can fill the position. This labour market comprises not only

the Netherlands, but the entire EU/EEA. Another requirement is that the position
must be advertised within the EU/EEA well in advance (at least five weeks before
the work permit is requested), in other words: before the employee is recruited from
abroad. This costs time and effort. These grounds for refusal are not applicable in
the case of an intercompany transfer of specialised employees.
As from 1 January 2014 the validity of a work permit is limited to only one year. If the
foreign employee needs to continue his activities in the Netherlands after this period
the work permit application process needs to start all over again.
Partners of intercompany transfer employees are free to work on the basis of the
work permit granted to their partners. Special conditions apply to intercompany trans-
fers.
1.5.3 Highly skilled migrant workers
Highly skilled migrant workers (‘knowledge migrants’) are employees (in other words,
not self-employed persons) whose income lies above a certain level and is in line
with the prevailing market. The salary test is applied on a monthly basis. This test is
set at € 4,189 gross per month excluding holiday allowance for those over the age
of 30; for those under the age of 30, it is € 3,071 gross per month excluding holiday
allowance.
After completing their studies in the Netherlands, foreign university graduates are
allowed to stay in the Netherlands for a period of one year to find employment as a
highly skilled migrant worker. The minimum income that is required in this situation
amounts to € 2,201 gross per month excluding holiday allowance.
After this year, these employees must have either an employment contract or an
appointment as a civil servant.
One should keep in mind that the work activities of a knowledge migrant do not need
to be limited to one particular employer. However, the employer must always be able
to give above guarantee. This means that, if the migrant’s income were to fall below
this level – for instance because he decided to work part-time – then he would lose
his status of knowledge migrant. The employer is required to report this and to
request a work permit for this employee.
Another example of knowledge migrants is those working on a Ph.D.; there is no
age or income limitation for them. Also postdoctoral or university professors under
the age of 30 are to be considered knowledge migrants, regardless of their income.

The following persons – inter alia – do not qualify as knowledge migrants: professional
soccer players, clergymen, self-employed persons and students.
Duration of the residence permit for knowledge migrants
Knowledge migrants receive a five-year residence permit if they have an employ-
ment contract for an unlimited period of time. If they have an employment contract
for a limited period of time, the residence permit is granted for this same period, with
a maximum of five years. In these cases, the residence permit will not have to be
extended regularly. This leads to a reduction in administrative burden.
1.6 Legal residence wealthy foreigners
Wealthy foreign nationals can more easily obtain a residence permit. For a regular
residence permit of 1 year the individual must have a net wealth of at least € 1,250,000
which is invested into the Dutch economy. With respect to this type of permit, strict
regulations apply.
1.7 Registration with the municipal authorities
If a foreign national wishes to stay in the Netherlands for a period of more than four
months in a six month period, he must register with the municipal authorities (“GBA”).
For this purpose he must submit:
• a valid passport (this also applies to the spouse and children);
• a legalised copy of his birth certificate (this also applies to the spouse and chil-
dren);
• a legalised marriage certificate (if applicable);
• if either partner was previously married, a copy of the divorce decree.
Non-residents staying in the Netherlands for a period not exceeding four months also
have to register but as non-resident (RNI).
1.8 Driving licence
As a rule, residents of the Netherlands are required to have a Dutch driving licence
in order to be allowed to drive a motor vehicle. There are, however, a number of
exceptions to this rule. Holders of a valid driving licence issued in other countries in
the European Union (EU) or in countries of the European Free Trade Association
(EFTA) are entitled to drive in the Netherlands on their non-Dutch driving licence for

ten years as of the date it has been issued if the date of issue is prior to 19 January
2013, or fifteen years if the licence has been issued after 19 January 2013 (unless
the validity elapses at an earlier point in time).
Holders of a valid driving licence issued in countries outside the EU and EFTA, or
in former Netherlands Antilles or Aruba, who come to live in the Netherlands are
allowed to drive a motor vehicle in the Netherlands on their national licence for a
maximum period of 185 days after entrance. Before this period expires, such person
has to either take a driving test in the Netherlands to get a Dutch driving licence, or
exchange his own non-Dutch licence for a Dutch one.
Special rules apply to employees (and their family members) to whom the 30%-ruling
(see section 2.4) has been granted, also if they come from countries outside the
EU or EFTA. If they can show the tax office’s 30%-ruling decision, they can easily
exchange their non-Dutch driving licence for a Dutch one.

2 Taxation
2.1 Residence
For Dutch tax purposes, it is essential to know whether an individual who is working
in the Netherlands is considered a tax resident of the Netherlands or not. If so, he
is considered a resident taxpayer; if not, he is considered a non-resident taxpayer.
A non-resident taxpayer may opt to be treated as a resident taxpayer. An employee
benefiting from the 30%-ruling can choose the status of partial non-resident taxpayer.
Dutch residency is determined on the basis of facts and circumstances. The existence
of a long-term relationship of a personal nature with the Netherlands is regarded as
a very important factor. Dutch case law shows that the following circumstances are,
amongst others, relevant in this regard:
• the place where he has his home;
• the place where his family (partner) resides;
• the place where he works;
• the duration of his stay in the Netherlands;
• other personal ties with the Netherlands, such as (club) memberships, bank
accounts, etc.
Any individual from abroad who is working in the Netherlands can, for tax purposes,
be considered a resident of more than one country. This may result in double taxa-
tion. However, most tax treaties that have been concluded between the Netherlands
and other countries provide a solution for this.
The regulations that apply to resident taxpayers differ substantially from those that
apply to non-resident taxpayers. We have therefore chosen to discuss the two situ-
ations separately. Individuals who are resident taxpayers should refer to section 2.2.
Section 2.3 is relevant to those who are non-resident taxpayers. In section 2.4, the
specific situation of employees who benefit from the 30%-ruling and who may choose
to be treated as partial non-resident taxpayer is explained.

2.2 Resident taxpayers
This section applies to individuals who are resident taxpayers (see section 2.1) and
partly (for income in Box 1 only) to partial non-resident taxpayers (see section 2.4).
2.2.1 Income tax
Unlimited tax liability
Resident taxpayers owe income tax on their worldwide personal income irrespec-
tive of where it is earned or paid. The Dutch tax year runs from January 1 through
December 31. Income is taxed in three separate Boxes:
• Box 1: income from work and home;
• Box 2: income from substantial shareholding; and
• Box 3: income from savings and investments.
2.2.1.1 Box 1: Income from work and home
The income from work and home, taxable in Box 1, includes:
• employment income, pensions, social security benefits, etc.;
• business profits (for entrepreneurs);
• income from work that is not considered salary or business profit (e.g. free-lance
activities, extra earnings, etc.): special rules apply to this type of income;
• income and capital gains from so-called lucrative interests, i.e. from certain finan-
cial instruments used as an employee incentive (e.g. carried interest, ‘sweet
equity’ and non-recourse loans);
• negative income for income provisions (e.g. refund of previously deducted life
insurance premiums);
• periodic payments such as alimony and certain state benefits; child alimony is
not taxable;
• deemed rental income in connection with a privately owned principal residence
in the Netherlands.
Deductible expenses:
• expenses for commuting by public transport;
• interest and other costs related to mortgage loan(s) and ground rent paid for long
lease, under strict conditions;
• expenses for ‘income provisions’, e.g. annuity premiums;
• alimony or maintenance expenses paid to a former spouse or partner;
• particular expenses for medical care;
• weekend expenses for severely handicapped persons over the age of 21;
• educational expenses;
• expenses in connection with a building listed as a Monument;
• donations to qualifying charitable institutions.
Some of the deductible items are income-related.

Employment income
Employment income (world-wide) consists of employment income and certain other
kinds of benefits, including pension benefits. Employment income is discussed in
more detail in section 2.2.2.1. Employment related expenses are not deductible,
except, under conditions, commuting expenses if travelling by public transport when
these expenses have not been reimbursed by the employer.
Income from other activities
Specific regulations apply to income generated from other (free-lance) activities, not
being employment income or business profits, and to income generated by practising
an independent profession. In order to qualify, the person concerned must satisfy
certain criteria. If these criteria are not met, the income will generally be taxed as
employment income.
If he wishes to enjoy certain employee benefits, the self-employed can, under certain
conditions, elect to be treated as an employee (‘opting-in’).
The tax authorities can – upon request – issue a so called ‘Verklaring Arbeidsrelatie’
or VAR, confirming the self-employed status of such person. A new system replacing
the VAR will be introduced most likely in 2015.
Dutch real estate
If the taxpayer owns a house in the Netherlands which is to be considered his prin-
cipal place of residence, the taxable income attributable to this home ownership is
set at 0.75%1
of the official value of the house, as determined by the municipality
(WOZ-value), up to a WOZ-value of € 1,050,000.
For houses having a WOZ-value exceeding € 1,050,000, the deemed rental value will
be € 7,875 plus 2.05% of the value of the house in as far as exceeding € 1,050,000.
In view of this fixed income, the costs of home ownership (except for mortgage costs
and ground rent) are not tax-deductible.
Since mortgage interest paid is deductible if the house is used as the principal place
of residence (during a maximum period of 30 years), home ownership generally is a
negative source of income. As of January 2013, more strict regulations apply as to
the type of new mortgage loans taken in order to enable a house owner to deduct
mortgage interest. An essential condition is that scheduled annuity repayments are
made on the loan.
A second residence or other owned real estate, rented out or not, is taxed in Box 3
(see 2.2.1.3).
1 For houses having a WOZ-value not exceeding € 75,000, the applicable percentage ranges from
0% to 0.60%

If a mortgage for the principal place of residence existing on 31 March 2013 is linked
to an endowment insurance (i.e. the mortgage is repaid out of the insurance lump
sum payment), this endowment insurance may be taxable in Box 1, upon expiration,
in as far as it exceeds a certain exempted amount (thus avoiding paying tax in box
3). If the conditions are not met, the endowment insurance is taxed in Box 3.
Endowment insurances starting as of 1 January 2013, also those related to a prin
cipal home, will be taxed in Box 3.
Please note that if one rents out or sells his principal place of residence in the Nether-
lands and purchases a new residence, additional regulations (‘bijleenregeling’) may
apply, which may reduce the amount of mortgage interest he can deduct.
2.2.1.2 Box 2: Income from substantial shareholding
If an individual, together with his fiscal partner, owns at least (directly or indirectly) 5%
of the shares or of any class of shares in a company, the income is taxed in Box 2.
Certain expenses can be deducted. Also, the balance of certain personal deductions
(not deducted in Boxes 1 or 3) can be deducted in Box 2.
Although the main rule is that capital gains are tax-exempt and that capital losses
are not deductible, an exception applies to capital gains on shares which qualify as
substantial interest for tax purposes. Then, capital gains are taxed and capital losses
are deductible in Box 2.
2.2.1.3 Box 3: Income from savings and investments
The value of almost all worldwide assets of an individual minus most of his debts and
liabilities per 1 January of the tax year, is the basis for calculating a fixed notional
income of 4% in Box 3. Personal allowances may reduce this taxable basis. The
investment income actually realised (such as interest, dividends or rental income)
is not taxed.
2.2.1.4 Partner rule
Married persons and persons officially registered as partners are automatically con-
sidered partners for tax purposes. Other unmarried individuals will only qualify as
partners if they are registered at the same address and have either:
• a notarial cohabitation contract;
• a joint child;
• a joint privately owned principal residence or;
• a joint pension plan.

Being partners, two persons can divide certain income and deductible items between
them, in order to realise optimal tax benefit. The same applies to taxable assets and
deductible debts and liabilities in box 3 (see 2.2.1.3).
2.2.1.5 Tax rates
The total income tax liability is the sum of the income tax calculated over the taxable
income in three Boxes.
Income tax is levied together with national insurance contributions. The amount of
national insurance contributions due is calculated over the first two tax brackets of
Box 1 (see also 3.2.5.). The total amount of income tax and – if applicable – national
insurance contributions is reduced with the applicable tax rebates.
2015
Box 1 (under 65)2
Taxable income
exceeding
up to tax
in %
national
insurance
in %
total
in %
total due
in €
0 19,822 8.35 28.15 36.50 7,234
19,822 33,589 13.85 28.15 42.00 13,016
33,589 57,585 42.00 42.00 23,094
57,585 52.00 52.00
Box 2
The tax rate applicable to income taxed in Box 2 is 25%.
Box 3
Income in Box 3 is taxed at a flat rate of 30%.
Certain tax-exempt amounts in Box 3 are available under specific conditions.
Debts are deductible to the greater extent.
2.2.1.6 Tax rebates
Each individual who is a resident of the Netherlands and/or is subject to the social
security schemes of the Netherlands has a right to specific rebates on the income
tax/national insurance contributions due, the level depending on his personal circum
stances (tax rebates).
2 Other rates and/or brackets apply as of pensionable age for state pension purposes.

Each resident taxpayer has a right to (at least) the general tax rebate. A spouse/
partner who has no or a small income of his/her own can (partially) receive the
general rebate upon request from the tax authorities.
If an individual is not compulsorily covered by the Dutch social security system he
is entitled to the tax part of the rebate only. Some of the tax rebates are taken into
account when the wage tax withholding is calculated, others can be claimed on the
personal income tax return only. In a year of migration the social security part of the
rebate is pro-rated.
2.2.2 Wage tax
In the Netherlands an employer has the obligation to withhold wage tax (and social
security contributions, if applicable) from the employment income paid to its employ-
ees (see 2.2.2.3). This deduction is an advance tax to be credited against the
personal income tax eventually due. The tax is calculated over the same brackets
and the same rates apply.
2.2.2.1 Employment income
The term employment income is defined very broadly and comprises cash benefits,
benefits in kind and also entitlements.
Income in cash
Besides regular employment income, cash benefits can also include expat allow-
ances, commissions, bonuses, etc.
Income in kind
Benefits in kind include the private use of a company car, free housing, free meals,
free travel, shares, goods, etc. There are general and specific rules for determining
the taxable amount of benefits in kind.
The private use of a company car is subject to taxation. The annual benefit is basically
25%3
of the official Dutch list price of the car. Only if the employee can prove that the
private mileage does not exceed 500 kilometres per full calendar year, the taxable
benefit in that year will be nil. Commuting qualifies as business travel. A statement
confirming this can be requested from the tax authorities. It is necessary to maintain a
detailed kilometre registration and to retain supporting documents.
3 The benefit is calculated at 4%, 7%, 14% or 20% of the official Dutch list price of the car for
environmental-friendly cars with zero or low CO2-emission.

Entitlements
The third category, entitlements, includes conditional rights to receive one or more
future benefits in cash or in kind. Taxation of most entitlements is deferred to the
time the benefits are received. Examples of such entitlements are pension rights and
rights to receive benefits under one of the employee insurance schemes (see 3.3).
Pension schemes
The term ‘pension’ is strictly defined for tax purposes. It does not refer to the General
Old Age Pension based on the state social security system (AOW). A pension scheme
that complies with the pension definition as provided in the law is called a qualifying
pension scheme. If the pension scheme qualifies, the employee’s contributions are
tax-deductible and the employer’s contributions are tax-exempt. The benefits are
subject to taxation at the time of payment. However, if a pension scheme does not
qualify for Dutch tax purposes, the employee’s contributions are not tax-deductible
and the employer’s contributions constitute taxable income for the employee. As from
1 January 2015, it is no longer possible to accrue pension rights in a tax efficient way
on annual income exceeding € 100,000. In addition, the yearly accrual rate will be
decreased as from that date.
Participation in a non-Dutch pension scheme requires particular attention, as these
schemes often do not meet the conditions stated in Dutch law. In order for the non-
Dutch pension scheme to qualify for Dutch tax purposes, approval can be requested
from the Dutch tax authorities for a limited period of time. The changes which will
come into effect on 1 January 2015, will not apply to pension schemes from other
EU member states.
Employees seconded to the Netherlands who continue to accrue pension rights
under an approved non-Dutch pension scheme (i.e. with a non-Dutch pension fund
or insurance company) will receive a protective tax assessment (‘conserverende
aanslag’) on the pension rights they thus accrue or the tax-facilitated contribution
paid during the period of employment in the Netherlands, a final one being imposed
upon emigration. In principle, the annual increase of these pension rights is subject
to taxation. However, if certain conditions are met, the income tax is not actually
due. If at any time the non-Dutch pension scheme no longer qualifies, the income
tax due will have to be paid. A protective tax assessment is nullified after ten years
upon request.
Employees who participated in a Dutch pension scheme during their stay in the
Netherlands, will – upon emigration – also receive a protective tax assessment for
the total value of either the pension rights accrued or the total of the tax-facilitated
contributions paid during the period of employment in the Netherlands.

Stock option rights
Stock option rights are taxable upon exercise. In other words, tax is due over the
gain realised at that moment, being the difference between the fair market value of
the underlying shares at the moment of exercise and the exercise price of the stock
option rights. Please note that an exercise gain realized in relation to stock option
rights granted prior to coming to the Netherlands may also be (partially) taxable in
the Netherlands.
2.2.2.2 Expenses
Expenses incurred for the purpose of earning employment income – with some
exceptions – cannot be deducted on the individual’s income tax return.
Extraterritorial expenses/30%-ruling
An employer may compensate employees coming from abroad for extraterritorial
expenses. Under certain conditions, these employees may be entitled to the 30%-
ruling, which means they will receive a fixed tax-free allowance for extraterritorial
expenses. This facility is explained in section 2.4. The tax treatment of expense
allowances and benefits in kind may be different under the 30%-ruling (see 2.4).
Employment costs regime
Specific legislation applies when it comes to taxation of employee benefits, referred
to as the employment costs regime (werkkostenregeling). All benefits (whether in
cash or in kind) are regarded to be taxable wage, unless specific valuation rules and
exemptions apply. If the employer decides to take the wage tax due on the taxable
benefits for his account, the employer can make use of a tax-free employment costs
budget of 1,2% of the employer’s total taxable wages. On the excess, 80% employer
tax is applicable. Under circumstances, it may be more beneficial to tax the excess
taxable benefit on an individual basis (e.g. when the 30%-ruling applies).
2.2.2.3 Wage tax withholding obligations
In general, employers are required to deduct the wage tax and, if applicable, social
security contributions, due from the employee’s employment income and pay it to
the tax authorities on a monthly basis.
Only Dutch employers and non-Dutch employers with a permanent establishment
(e.g. an office or a branch), a permanent representative or a deemed permanent
establishment (see below) in the Netherlands, are required to withhold wage tax
and/or national insurance contributions. A non-Dutch employer may, under certain
circumstances, register as a wage tax (and national insurance contributions) with-
holding entity voluntarily. Please note that non-Dutch employers do have an obligation
to register as withholding entity for the payment of employer social security contri

butions, even if they do not have a (deemed) permanent establishment or represent
ative in the Netherlands, if the employee is subject to the Dutch social security
schemes. Non-Dutch employers, who professionally hire out employees to a prin
cipal (either a third party or a group company) to work in the Netherlands, are con-
sidered to have a ‘deemed permanent establishment’ in the Netherlands. This means
that they must register as a withholding entity for Dutch wage tax (and if applicable:
national insurance) purposes and maintain a payroll administration.
A Dutch group company may take over the withholding obligations of the non-Dutch
employer after having obtained prior formal approval from the Dutch tax authorities.
If an employee is employed by a non-Dutch employer who does not have a permanent
establishment, a deemed permanent establishment or a permanent representative in
the Netherlands and the employer is not voluntarily registered to withhold wage tax,
then there is no wage tax withholding liability for the employer; consequently, the
employee will have to file an annual income tax return to report his income and pay
income tax on assessment.
2.2.3 Gift tax, inheritance tax and transfer tax
Those who receive a (real or fictitious) gift from a (real or deemed) resident of the
Netherlands, owe gift tax (‘schenkbelasting’). Those who receive a (real or fictitious)
inheritance from someone who was a (real or deemed) resident of the Netherlands
at the time of death, owe inheritance tax (‘erfbelasting’). The place of residence of
the receiver/heir (or person who is deemed to have received something pursuant
to inheritance tax law) is not relevant. These rules also apply to expats who make a
gift or pass away while living in the Netherlands, even if they – within the context of
the 30%-ruling – opted to be treated as a partial non-resident taxpayer for income
tax purposes (see 2.4.6). The tax is levied on the market value of the gift or inheri-
tance and is levied at a progressive rate, depending on the value of the gift and the
relation between the receiver and the giver/deceased, and taking into account the
applicable exemptions. Acquisitions by children from their parents are taxed at a rate
that ranges between 10% and 20%. A gift or inheritance received from a non-related
person is taxed at a rate that ranges between 30% and 40%.
Someone who lived in the Netherlands, but has moved elsewhere and makes a gift
within a year after leaving the country, is considered a Dutch resident at that point in
time for gift tax purposes – regardless of his or her nationality.
A similar rule applies to those who have the Dutch nationality, have left the country
and who make a gift or leave an inheritance: if this takes place within ten years
after leaving the country, they are considered Dutch residents at the time of giving/

decease. In the case of a Dutch person who emigrated to Switzerland and died
before the ten years elapsed, the European Court of Justice ruled on 23 February
2006, that the fiction of residence in the Netherlands was not in conflict with the free
movement of capital, as provided in the EC Treaty. In the case of a Dutch person
who emigrated to Belgium and who died before the ten years elapsed, the Dutch
Supreme Court ruled on 22 December 2006, that the fiction was not in conflict with
European law.
It is, of course, possible that in the case of an inheritance or gift, inheritance tax or gift
tax, or a similar tax is due in another country as well. The Netherlands has entered
into a treaty for the purpose of avoiding double taxation in this area with a limited num-
ber of countries. If there is no applicable treaty, the Netherlands in some situations will
show some leniency based on the Decree on the Avoidance of Double Taxation 2001.
2.2.4 Real estate transfer tax
The transferee is subject to tax on the transfer of real estate (or certain rights regard-
ing such property) located in the Netherlands. The tax is charged over the value of
the property at a rate of 2% for houses. Other real estate is taxed at a rate of 6%.
2.2.5 Import duties, VAT and excise duties
If personal property is transferred to the Netherlands because of a change of domi-
cile, import duties and VAT may be due, while some items may also be subject to
excise duties. A distinction should be made between personal property transferred
from a country outside the EU and personal property transferred from another
Member State of the EU. If this property is transferred from a country outside the EU
in connection with the change of domicile, it is possible – under certain conditions –
to obtain an exemption from taxation.
In general, the customs authorities will want to see proof of the importation of per-
sonal belongings. This means a lot of paperwork. A short list of the extra documents
required:
• employment contract;
• declaration from employer (about the duration of the stay in the Netherlands);
• rental or purchase contract of the home;
• proof of registration in the new hometown;
• proof of end of registration in the former hometown;
• copy of passport(s);
• signed inventory lists (2 copies).

2.2.5.1 Moving from outside the EU to the Netherlands
As mentioned above, if an employee transfers his principal place of residence from
a country outside the EU to the Netherlands, the importation of his personal property
is subject to import duties, VAT and possibly excise duties4
. In order to obtain afore-
mentioned exemption from taxation, the employee must apply for an authorisation
(licence) from the Dutch customs department. The relocation company (international
remover) can generally take care of this as well as of the other customs paperwork.
The exemption applies both to household goods and to other personal property,
under the following conditions:
a. the employee must have lived abroad for at least 12 consecutive months;
b. the employee must have owned and used (in the case of non-consumer goods)
the goods abroad for at least 6 months prior to bringing them into the Nether-
lands. This has to be clearly demonstrated;
c. the employee must declare the personal property at Customs within 12 months
after the actual transfer of domicile;
d. the employee is not permitted to sell, lease, lend or otherwise transfer the goods
within 12 months after bringing the goods in free circulation of the EU.
In particular situations or circumstances (force majeure), customs can be requested
to set aside these rules and conditions.
2.2.5.2 Moving from another EU Member State to the Netherlands
The internal frontiers between the EU Member States have been abolished and
individuals can transfer their personal property from another EU Member State to
the Netherlands without fulfilling any formalities. This rule is only valid for belongings
that are already in free circulation and on which all taxes have been paid. There are
no customs formalities involved.
2.2.6 Registration tax on private cars and motorcycles (BPM)
If an employee who has transferred his principal place of residence to the Nether-
lands brings in his car (or motorcycle), the car has to be registered here. He will then
owe Dutch car tax, called ‘BPM’ (‘Belasting op personenauto’s en motorrijwielen’).
Failure to register is prevented, as Dutch residents who use a car on the Dutch public
roads that is not registered in the database of the Public Department of Road Traffic
also owe BPM. However, if the car is part of the personal property of the employee
and is transferred to the Netherlands in connection with a relocation, then an exemp-
tion may be obtained. Subject to certain conditions, even company cars can be
considered personal goods to which a tax exemption applies.
4 No exemption can be obtained for alcoholic products, tobacco or tobacco products and articles
for professional purposes.

The conditions that have to be met in order to be granted an exemption for BPM are
similar to those mentioned in section 2.2.5.1.
This exemption constitutes quite a saving, which is why customs are vigilant when
it comes to enforcing it, both during the application phase as well as after the
vehicle has been imported. At the very least, the following documents will have to
be shown:
• registration forms (licence plates);
• invoice of purchase.
The registration of the car is entered in the database of the Public Department
of Road Traffic. If the car is sold, leased, lent out or otherwise transferred within
12 months after importation, the customs authorities will be informed of this and they
will impose the BPM, in most cases with an additional penalty.
The above also applies to cars and motorcycles that are transferred from another
Member State of the EU to the Netherlands. In this case however the authorisation
must be applied from the tax authorities instead of customs authorities.
If the conditions are not met when the car is brought into the Netherlands, BPM will
be due. In case the car is imported from outside EU, also VAT (21%) and/or import
duties will be due. The current rate of import duty is, in most cases, 10%.
2.2.7 Motor vehicle tax
Any person in whose name a motor vehicle is registered in principle owes road tax.
This tax is paid in advance. The taxpayer is entitled to a refund on a time-propor-
tionate basis if the car is de-registered or registered in the name of another person
before the end of the term.
2.2.8 Real estate tax/other charges
Real estate tax is a municipal tax due in connection with the ownership (or certain
derived rights) of real estate in the Netherlands. The tax is calculated over the WOZ-
value of the property, being the official appraisal value determined by the municipality
on an annual basis. Rates vary from one municipality to another.
There are various other, minor, charges, such as local tax on dog ownership, waste
collection tax, water board tax, pollution charge, etc.

2.2.9 Double taxation
Since an individual who is a resident of the Netherlands has to pay tax on his world-
wide income, he may be faced with double taxation if he earns income outside the
Netherlands. After all, income earned abroad is usually subject to local taxes.
This situation is covered by the tax treaties the Netherlands has concluded with many
countries. The countries with which the Netherlands has concluded a tax treaty are
summarised in Appendix 1.
If the Netherlands has not concluded a tax treaty with the other country, specific
national regulations protect the individual from double taxation.
This often means that income earned abroad is exempted from taxation in the
Netherlands, although it will be taken into account for the purpose of calculating the
(progressive) tax rates applicable to the taxpayer’s further taxable income, which is
thus taxed in the normal way.
Some treaties, however, provide a ‘credit method’, applicable to e.g. director’s fees.
In that case, the tax paid abroad on the income can be credited against the Dutch
tax due on the same income up to the amount of Dutch tax due.
Employment income
In most tax treaties the Netherlands has concluded with other countries, employ-
ment income exercised by a tax resident of the Netherlands in another country than
the Netherlands is taxable in the Netherlands, provided that the following conditions
are met:
1. the resident taxpayer is present in the other country for a period or periods not
exceeding in the aggregate 183 days in any 12-months period or in a (tax) year; and
2. the remuneration is paid by or on behalf of an employer who is not a resident of
the other country; and
3. the remuneration is not borne by a permanent establishment of the employer or
by a permanent representative in the other country.
If one or more of these (cumulative) conditions are not met, the income related to
employment activities carried out in the other country may be taxed in the other
country. In that case, the Netherlands is held to grant a relief for double taxation.
As for the second condition, the Netherlands Supreme Court has ruled in December
2006 that – solely for the purposes of the application of the tax treaty – the com-
pany to which the employee is made available is to be considered this employee’s
(economic) employer if the following conditions are met:
1. a relationship of authority exists between the employee who is sent to work
abroad and the receiving company in the country of employment; and

2. the work is carried out at the expense and for the risk of the company in the
country of employment, the latter entailing that:
• the benefits of the employment activities as well as the disadvantages and
risks are for the account of the receiving company; and
• the costs in connection with the employment are borne by the receiving com-
pany in the country of employment. If the employment income is paid by the
legal employer in the country of origin, then these costs should be specified
and charged to the economic employer in the country of employment on an
individual basis, in order to meet this condition.
The impact of this rule is that, regardless whether the resident employee spends
less or more than 183 days in the other country, the other country is allowed to levy
tax as of the first day if the receiving company in that country is considered to be the
economic employer. Please note that the Supreme Court has only ruled on the Dutch
interpretation of the tax treaties. In the other country it may, for example, be decided
that the position of the formal employer is the decisive factor when determining which
country may levy taxes. This will always have to be determined in advance in order to
avoid double taxation. Please bear in mind that the status of economic employership
is relevant only for the application of the tax treaty and does not influence the civil
employer-employee relationship or the obligations of the legal employer for Dutch
wage tax purposes.
Statutory director’s fee / supervisory board member’s fee
As far as fees received by a resident statutory director or supervisory board mem-
ber of an entity established outside the Netherlands are concerned, the country of
establishment is entitled to levy tax under most tax treaties the Netherlands has
concluded, even if the director or supervisory board member does not physically
perform his duties in that country (please note that an exception is made in several
tax treaties).
Tax treaty with Belgium and Germany
Under the treaty between Belgium and the Netherlands, employees who are resident
of the Netherlands, but work in Belgium and are subject to Belgian taxation on their
employment income, are compensated by the Netherlands for the difference between
the (higher) Belgian taxes and the Dutch taxes, as well as for the loss of the benefit
of tax-deductible items (‘compensatieregeling’).
The new tax treaty between the Netherlands and Germany, which is likely to become
effective as of 2016, provides a similar compensation scheme.

2.3 Non-resident taxpayers
This section is intended for taxpayers who are considered non-residents of the
Netherlands for tax purposes (see 2.1) and partly (for income in Box 2 and Box 3
only) for partial non-resident taxpayers (see 2.4).
2.3.1 Income tax
2.3.1.1 Limited tax liability
A non-resident taxpayer is only liable to pay income tax in the Netherlands on his
income from certain Dutch sources. That is why the tax liability is limited. The tax
year runs from 1 January through 31 December.
2.3.1.2 Sources of taxable income
The main sources of income that determine a non-resident taxpayer’s taxable
income in the Netherlands are income from business, employment, real estate (in
the Netherlands), periodic benefits (whether in cash or in kind) and a substantial
shareholding in a Dutch company. Tax is due over the gross income less deductible
expenses. Partners are taxed on an individual basis.
Box 1: Income from work and home
Employment income
For non-resident taxpayers, taxable sources of employment income are:
1. income earned from present or past employment in the Netherlands, which
means that only the income earned on working days physically spent in the
Netherlands is taxed in the Netherlands (please note that there are some excep-
tions to this rule);
2. income earned in the capacity of statutory director or member of the supervisory
board of an entity established in the Netherlands, even if the actual duties are
performed solely abroad (exceptions under several tax treaties).
Employment income is discussed in more detail in section 2.3.2.1.
Business income/self-employed
Business income is taxable in the Netherlands if (the company of) the self-employed
has a permanent establishment (e.g. a branch) or a permanent representative in the
Netherlands. Specific regulations and exemptions apply to the calculation of busi-
ness income earned in the Netherlands.

Income from lucrative interests
Income from and capital gains on certain financial instruments (e.g. carried interest,
‘sweet equity’ and non-recourse loans) used as an employee incentive in the Nether
lands are taxable in Box 1, in principle.
Periodic benefits
Income in the form of periodic benefits including certain State benefits.
Deductible expenses
Certain items may be deducted from the total amount of the abovementioned sources
of income, such as negative income in previous years.
Box 2: Income from substantial shareholding
If a non-resident, together with his fiscal partner, owns at least (directly or indirectly)
5% of the shares or of any class of shares in a company established in the Nether
lands, the related income is taxed in Box 2. Certain expenses can be deducted.
Capital gains
Although the main rule is that capital gains are tax-exempt and capital losses not
tax-deductible, an exception applies to capital gains on shares if the shareholder
has an (in)direct substantial shareholding in a Dutch company. In that case, capital
gains are taxed in Box 2.
Box 3: Income from savings and investments
The value on 1 January of a limited number of assets in the Netherlands (for
instance, real estate in the Netherlands) reduced with debts, is the basis for taxing a
fixed notional income of 4% of this balance. The actual income realised is not taxed.
Personal allowances are not available to non-resident taxpayers.
2.3.1.3 ‘Qualifying non-resident taxpayers’ regime as of 2015
In order to enable non-resident employees to benefit from tax benefits they cannot
(fully) realize in their home country (since their income is not (fully) taxed there),
certain non-resident taxpayers can make use of the special status of being a ‘quali-
fying non-resident taxpayer’. If conditions are met they are (almost) fully treated in
the same way as resident taxpayers, which may have positive consequences for the
partner rule to apply, tax rebates and tax deductibles.

Conditions
• The regime is available to residents of EU Member states, EEA and BES coun-
tries
• The income must be subject to Dutch wage tax or income tax for at least 90%.
• To demonstrate that the 90% criterium is met, annually an income statement
issued by the tax authorities of the home country must be submitted.
Partner
A qualifying partner is a person
• who could have been partner if both would have been residents of the Nether-
lands
• who satisfies – individually or together with the employee – the 90% requirement.
Deductibles can be realized in as far as the home country does not honour tax
deductibles of the employee and/or his partner.
National insurance contributions
Tax deductibles may also be used for establishing the basis for calculating the
national insurance contributions.
2.3.1.4 Tax rates
The total income tax due is the sum of the income tax calculated over the taxable
income in three Boxes.
Income tax is levied together with national insurance contributions. The amount of
national insurance contributions due is calculated over the first two tax brackets of
Box 1 for those who are insured under the Dutch social security schemes.
The total amount of income tax and – if applicable – national insurance contributions
is reduced with the applicable tax rebates.

2015
Box 1 (under 65)5
Taxable income
exceeding
up to tax
in %
national
insurance
in %
total
in %
total due
in €
0 19,822 8.35 28.15 36.50 7,234
19,822 33,589 13.85 28.15 42.00 13,016
33,589 57,585 42.00 42.00 23,094
57,585 52.00 52.00
Box 2
The tax rate applicable to income taxed in Box 2 is 25%.
Box 3
The tax rate is a flat tax rate of 30%.
2.3.1.5 Tax rebates
For non-residents just a limited number of tax rebates are available.
2.3.1.6 Partner rule
In general, the partner rule (see 2.2.1.4) is not applicable to non-resident taxpayers,
except for residents of Surinam, Aruba, Curacao, Sint Maarten (Dutch) and Belgium,
or to non-residents who are qualifying non-resident taxpayers (see 2.3.1.1).
2.3.1.7 Tax treaties
Residents of Surinam, Aruba, Curacao, Sint Maarten (Dutch), Germany and Belgium
are entitled to specific benefits as defined in the applicable tax treaty.
2.3.2 Wage tax
In the Netherlands an employer has the obligation to withhold wage tax (and social
national insurance, if applicable) from the employment income paid to its employees
(see 2.3.2.3). This deduction is an advance tax to be credited against the personal
income tax eventually due. The tax is calculated over the same brackets and the
same rates apply.
2.3.2.1 Employment income
The term employment income is defined very broadly in Dutch law and comprises
cash benefits, benefits in kind and also entitlements.
5 Other rates and/or brackets apply as of pensionable age for state pension purposes

Income in cash
Besides regular employment income, cash benefits include expat allowances, com-
missions, bonuses, etc.
Income in kind
Benefits in kind include the private use of a company car, free housing, free meals,
free travel, shares, goods, etc. There are general and specific rules for determining
the tax due on benefits in kind.
Entitlements
The third category, entitlements, includes conditional rights to receive one or more
future benefits in cash or in kind. Taxation of most entitlements is deferred to the
time the benefits are received. Examples of such entitlements are pension rights and
rights to receive benefits under one of the employee insurance schemes (see 3.3.).
The private use of a company car is subject to taxation. The annual benefit is
basically 25%6
of the official Dutch list price of the car. Only if the employee can
prove that the private mileage does not exceed 500 kilometres per full calendar year,
the taxable benefit in that year will be nil. Commuting qualifies as business travel. A
statement confirming this can be requested from the tax authorities. It is necessary
to maintain a detailed kilometre registration and to retain supporting documents.
Tax-free allowances
In certain cases, an employer is allowed to make tax-free payments or to provide
income in kind free of tax. For example, as a reward for long periods of service. The
amount of these tax-free allowances is capped.
Pension schemes
The term ‘pension’ is strictly defined for tax purposes. It does not refer to the General
OldAge Pension based on the State social security system (AOW).Apension scheme
that complies with the pension definition as provided in Dutch tax law is a qualifying
pension scheme. If a pension scheme qualifies, the employee’s contributions are tax-
deductible and the employer’s contributions are tax-exempt. The benefits are subject
to taxation at the time of payment. However, if a pension scheme does not qualify
for Dutch tax purposes, the employee’s contributions are not tax-deductible and the
employer’s contributions constitute taxable income for the employee.
6 The benefit is calculated at 4%, 7%, 14% or 20% of the official Dutch list price of the car for
environmental-friendly cars with zero or low CO2-emission.

As from 1 January 2015, it is no longer possible to accrue pension rights in a tax-
efficient way on income exceeding € 100,000. In addition, the yearly accrual rate will
be decreased as from that date.
Participation in a non-Dutch pension scheme requires particular attention, as these
schemes often do not meet the conditions stated in Dutch law. In order for the foreign
pension scheme to qualify for Dutch tax purposes, approval can be requested from
the Dutch tax authorities for a limited period of time. The changes which will come
into effect, on 1 January 2015 will not apply to pension schemes from other EU
member states.
Employees seconded in the Netherlands who continue to accrue pension rights
under an approved non-Dutch pension scheme (i.e. with a non-Dutch pension fund
or insurance company) will receive a protective tax assessment (‘conserverende
aanslag’) on the pension rights they thus accrue or the tax-facilitated pension contri-
butions paid during their employment in the Netherlands.
In principle, the annual increase of these pension rights is subject to taxation. How-
ever, if certain conditions are met, the income tax is not actually due. If at any time
the non-Dutch pension scheme no longer qualifies, the income tax due will have to
be paid. A protective tax assessment is nullified after ten years upon request.
Stock option rights
Stock option rights are taxable upon exercise. In other words, tax is due over the
gain realised at that moment, being the difference between the fair market value of
the underlying shares at the moment of exercise and the exercise price of the stock
option rights. Please note that an exercise gain realized in relation to the exercise
of stock option rights granted in the period before the start of the employment in the
Netherlands may also be (partially) taxable in the Netherlands.
2.3.2.2 Expenses
Expenses incurred for the purpose of earning employment income – with some
exceptions – cannot be deducted on the individual’s income tax return.
Extraterritorial expenses/30%-ruling
An employer may compensate employees coming from abroad for extraterritorial
expenses. Under certain conditions, these employees may be entitled to the 30%-
ruling, which means they will receive a fixed tax-free allowance for extraterritorial
expenses. This facility is explained in section 2.4. The tax treatment of expense
allowances and benefits in kind may be different under the 30%-ruling (see 2.4).

Employment cost regime
Specific legislation applies when it comes to taxation of employee benefits, referred
to as the employment costs regime (werkkostenregeling). All benefits (whether in
cash or in kind) are regarded to be taxable wage, unless specific valuation rules and
exemptions apply. If the employer decides to take the wage tax due on the taxable
benefits for his account, the employer can make use of a tax-free employment costs
budget (vrije ruimte) of 1.2% of the employer’s total taxable wages. The excess is
taxed with 80% employer tax. Under circumstances, it may be more beneficial to tax
the excess taxable benefit on an individual basis (e.g. when the 30%-ruling applies).
2.3.2.3 Wage tax withholding obligations
In general, employers are required to deduct the wage tax and, if applicable, national
insurance contributions, due from the employee’s employment income and pay it to
the tax authorities on a monthly basis.
Only Dutch employers and non-Dutch employers with a permanent establishment
(e.g. an office or a branch), a permanent representative or a deemed permanent
establishment (see below) in the Netherlands, are required to withhold wage tax
and national insurance contributions. A non-Dutch employer may, under certain
circumstances, register as a wage tax (and social national insurance contributions)
withholding entity voluntarily. Please note that non-Dutch employers do have
an obligation to register as withholding entity for the payment of employer social
security contributions, even if they do not have a (deemed) permanent establishment
or representative in the Netherlands, if the employee is subject to the Dutch social
security schemes. Non-Dutch employers, who professionally hire out employees to
a principal (either a third party or a group company) to work in the Netherlands, are
considered to have a ‘deemed permanent establishment’ in the Netherlands. This
means that they must register as a withholding entity for Dutch wage tax purposes
and maintain a payroll administration.
A Dutch group company may take over the withholding obligations of the non-Dutch
employer after having obtained prior formal approval from the Dutch tax authorities.
If an employee is employed by a non-Dutch employer who does not have a perma-
nent establishment, a deemed permanent establishment or a permanent represent
ative in the Netherlands and the employer is not voluntarily registered to withhold
wage tax, then there is no wage withholding tax liability for the employer; con
sequently, the employee will have to file an annual income tax return and pay income
tax on assessment.

2.3.3 Gift tax and inheritance tax
The inheritance tax and gift tax levied upon the death of a non-Dutch resident (being
a non-resident not having the Dutch nationality) or on a gift by a non-Dutch resident
have been abolished as of 1 January 2010.
Deemed resident
A Dutch national is deemed to be a resident of the Netherlands up to ten years after
leaving the Netherlands. When the Dutch national dies within the ten years period
or makes a gift, the acquisitions by the beneficiaries of the deemed Dutch resident
may be taxed with Dutch inheritance tax or gift tax.
A person, of any nationality, who lived in the Netherlands, but has left the Netherlands
and makes a gift within a year after leaving the Netherlands is a deemed resident
of the Netherlands for gift tax purposes. It is not relevant whether he was a partial
non-resident taxpayer for income tax purposes under the 30%-ruling (see 2.4.6).
Inheritance taxes are due on what an individual receives upon the death of a person
who was a resident or was deemed to be a resident of the Netherlands. When
levying inheritance tax it is not relevant whether the beneficiaries are living in the
Netherlands. It is also not relevant in which country the assets of the deceased are
located. The Netherlands will tax on a worldwide basis. The beneficiaries are liable
for the inheritance tax.
Similar rules apply to gifts received from a person who is a resident or is deemed
to be a resident of the Netherlands. In that case, the beneficiary owes gift tax. The
person who makes the gift is also liable for the gift tax.

The tax is levied on the fair market value of the received assets at the time of receipt.
There are some tax exemptions. The exemptions and rates depend on the value of
the inheritance or gift and the (family) relationship between the deceased/donor and
the beneficiary. The tax rate varies from 10% to 40%. Acquisitions by children from
their parents are taxed at a rate of 10% to 20%, depending on the value of the inheri-
tance or gift. A gift or inheritance received from a non-related person is taxed at a rate
that ranges between 30% and 40%, depending on the value of the inheritance or gift.
It is, of course, possible that in the case of an inheritance or gift, inheritance tax
or gift tax, or a similar tax is due in another country as well. The Netherlands has
entered into treaties for the purpose of avoiding double taxation in this area with a
limited number of countries. If there is no applicable treaty, the Netherlands, in some
situations, will show some leniency based on the Decree on the Avoidance of Double
Taxation 2001.

2.3.4 Real estate transfer tax
The transferee is subject to tax on the transfer of (certain rights pertaining to) real
estate located in the Netherlands. The tax is levied on the value of the houses at a
rate of 2%. Other real estate is taxed at a rate of 6%.
2.3.5 Real estate tax/other charges
Real estate tax is a local tax due in connection with the ownership (or certain derived
rights) of real estate in the Netherlands. The tax is calculated over the WOZ-value of
the property, being the official appraisal value determined by the municipality on an
annual basis. Rates vary from one municipality to another.
There are various other, minor, charges, such as local tax on dog ownership, waste
collection taxes, water board tax, pollution charge, etc.
2.3.6 Double taxation
Since a non-resident taxpayer generally also owes tax in his country of residence on
income earned in the Netherlands, he could be faced with double taxation.
Employment income
This situation is covered in tax treaties. The countries with which the Netherlands
has concluded a tax treaty are summarised in Appendix 1.
In most of the treaties the Netherlands has concluded with other countries, employ-
ment income is tax-exempt in the Netherlands, provided that all following conditions
are met:
1. the non-resident taxpayer is present in the Netherlands for a period or periods
not exceeding in the aggregate 183 days in any 12-months period or in a (tax)
year; and
2. the remuneration is paid by or on behalf of an employer who is not a resident of
the Netherlands; and
3. the remuneration is not borne by a permanent establishment of the employer or
by a permanent representative in the Netherlands.
If one or more of these (cumulative) conditions are not met, the income related to
employment activities carried out in the Netherlands may be taxed in the Nether
lands. In that case, the country of residence is held to grant a relief for double
taxation, at least if there is a tax treaty between the two countries.
As for the second condition, the Netherlands Supreme Court ruled in December
2006 that – solely for the purpose of applying the tax treaty – the company to which
the employee is made available is to be considered this employee’s economic
employer if the following conditions are met:

1. a relationship of authority exists between the employee who is sent to work
abroad and the receiving company in the country of employment; and
2. the work is carried out at the expense and for the risk of the company in the
country of employment, the latter entailing that:
• the benefits of the work activities as well as the disadvantages and risks are
for the account of the receiving company; and
• the costs in connection with the work are borne by the company in the country
of employment. If the employment income is paid by the legal employer in
the country of origin, then these costs should be specified and charged to
the economic employer in the country of employment on an individual basis,
in order to meet this condition.
The impact of this rule is that, regardless whether the non-resident employee spends
less or more than 183 days in the Netherlands when working here, he will owe
income tax in the Netherlands as of day one, if the receiving Dutch company is
considered to be his ‘economic employer’. Please note that the Supreme Court has
only ruled on the Dutch interpretation of the tax treaties. In other countries it may be
decided that the position of legal employer is the decisive factor when determining
which country may levy taxes. This will always have to be determined in advance
in order to avoid problems with double taxation. Please bear in mind that the status
of economic employership is relevant only for the application of the tax treaties and
does not influence the civil employer-employee relationship or the possible obligations
of the legal employer for Dutch wage tax purposes.
The employee will owe personal income tax. The Netherlands economic employer
will not be required to deduct payroll taxes, though the formal employer abroad may
be (see 2.3.4).
Based on a Decree of the Ministry of Finance, in case of a short-term secondment
(not exceeding 60 working days in any period of twelve months) to a Dutch group
company, the Netherlands will not levy taxes on the employment income, provided
that the employee is assigned to the Netherlands because of his specific knowledge,
an exchange program or for career development reasons. Then it is assumed that
the employment activities do not form an integrated part of the business activities of
the Dutch group company and therefore no relationship of authority exists, which is
required for having an economic employer in the Netherlands.
Statutory director’s/supervisory board member’s fee
As far as fees received by a non-resident statutory director or supervisory board
member of an entity established in the Netherlands are concerned, the Netherlands
is entitled to levy tax under most tax treaties the Netherlands has concluded, even

if the director or supervisory board member does not physically perform his duties
in the Netherlands (please note that an exception is made in several tax treaties).
If the non-resident taxpayer is a resident of a country with which the Netherlands has
not concluded a tax treaty, in general no tax relief is granted, unless special national
rules in his home country provide a relief for double taxation.
2.4 The 30%-ruling
2.4.1 Introduction
The 30%-ruling is a tax facility provided in the Wage Tax Act for employees who have
been seconded to the Netherlands or recruited from abroad to work in the Nether-
lands and who meet certain conditions. These employees are referred to as ‘extra
territorial employees’. If the facility is granted, the employer may pay the employee a
– fixed – tax-free allowance of up to 30% of the employee’s employment income. The
30%-tax free allowance is meant to cover extraterritorial expenses: extra expenses
incurred as a consequence of the fact that the employee works outside his home
country. The ruling may also have positive consequences for the employee’s income
tax position: resident employees have the option to be treated either as a resident
taxpayer or as a partial non-resident taxpayer.
As of 1 January 2012, a number of restrictions to the 30%-ruling apply. Transitional
rules exist for employees who have been entitled to the ruling before this date.
Employees who do not satisfy (all) requirements of the 30%-ruling can receive a
tax-free allowance for the actual extraterritorial expenses instead of a fixed 30%-
allowance, but the employer then has to submit proof of these expenses.
2.4.2 The conditions for the 30%-ruling
The 30%-ruling is available to employees only. Statutory directors and supervisory
board members of a company established in the Netherlands may also qualify as
employee as well as shareholders of a Dutch company, even if the company is their
own personal company.
The 30%-ruling is also available to those employees who do not (physically) carry out
their work in the Netherlands, but whose income is nonetheless taxed here. There-
fore, statutory directors and supervisory board members living abroad may qualify.
The employee does not need to be a resident of the Netherlands.

Whether an employee satisfies the conditions of the 30%-ruling or not depends on
the circumstances at the moment the employer and employee reach an employment
agreement.
Coming from abroad
The employee must be seconded to the Netherlands or recruited from outside the
Netherlands. Furthermore, the employee must have lived at a distance of more than
150 km from the Dutch border during more than 2/3 of the 24 months period preced-
ing the start of the employment in the Netherlands. Several court cases are pending
fighting this additional requirement. The Dutch Supreme Court has raised questions
with the European Court of Justice as to a possible violation of EU-rules.
Dutch payroll
In order for the ruling to apply, an employer (Dutch or non-Dutch) must be a Dutch
wage tax withholding agent running a payroll in the Netherlands.
Specific expertise/scarcity
The employee must have specific expertise which is not or scarcely available on
the Dutch labour market. The requirement of specific expertise is a minimum salary
level: if the taxable annual salary of the employee exceeds an amount of € 36,705
(2015), it is assumed that the employee has specific expertise. For employees under
the age of 30 with a Master’s degree, a minimum salary level of € 27,901 (2015) is
applicable. During the term of the 30%-ruling each year the salary requirement of
that specific year must be met.
Request of both employee and employer. Application term four months
A request for the application of the 30%-ruling will only be granted if the employee
and the employer jointly file an application with the Tax Office for Non-Residents
in Heerlen. The tax office will confirm its approval through a formal Decision. The
application for the 30%-ruling must be filed within four months from the start of
the employee’s employment (first working day) in order to be allowed to apply the
30%-ruling (retro-actively) as of the first day. In case of late filing of the application
(i.e. not within four months), the 30%-ruling will apply as of the month succeeding
the month in which the application is filed, while the time spent in the Netherlands
already will be deducted from the maximum period of eight years.
Employment agreement
For the 30%-ruling to apply, the employer and employee must agree (in writing) that
a separate tax-free allowance for extraterritorial expenses will be paid in addition to
the gross salary, amounting to (at a maximum) 30% of the remuneration.

In order to not increase the costs of the employment for the employer, the contractual
gross salary must be reduced with the 30%-allowance. Reducing the contractual
gross salary could have an impact on certain benefits and the social security position.
For practical reasons, in the payroll administration an administrative split can be
made taking, as a basis, the original gross salary. The conditions are that an agree-
ment in writing is made between employer and employee that the 30%-ruling applies
(preferably in an addendum to the employment contract) as well as that the con
sequences of reducing the contractual gross salary are implemented correctly in the
payroll calculations.
Maximum period of eight years
The ruling applies for a maximum period of eight years, as long as the employee
meets the requirements of the 30%-ruling (permanent test).
Reduction with periods of earlier presence in the Netherlands
All earlier periods of presence or employment in the Netherlands will be deducted
from the maximum period of eight years unless there is a period of at least 25
years between the date of leaving the Netherlands and the date of return. Periods
of previous presence or work in the Netherlands that ended (!) more than 25 years
prior to the return to the Netherlands, will not be taken into account. Relaxation rules
apply in case of limited earlier presence or working in the Netherlands.
New employer
If an employee benefiting from the 30%-ruling changes employers, with an inter
ruption of three months7
at a maximum, he will again be able to benefit from the
30%-ruling in his new employment (provided that the conditions are met) after having
filed a new application (within four months) for the remaining part of the maximum
eight years period.
2.4.3 Consequences of the 30%-ruling for wage tax purposes
The 30%-ruling is applicable to income from present employment only. Therefore, the
30%-ruling cannot be applied to severance payments and pension benefits (being
income from past employment). Also, the 30%-ruling is not applicable to payments
made after the termination date of the employee’s employment in the Netherlands.
Final settlements should be made prior to the end of the month following the last
month of employment.
7 Between the end date of the contract with the former employer and the date on which the new
employment is agreed upon (not necessarily the starting date of the new employment).

After having calculated the tax-free 30%-allowance (see 2.4.4), an employee’s
taxable wage is assessed in the same way as the income of all employees in the
Netherlands is taxed. Tax-free allowances for certain expenses may be paid in
addition to the 30%-allowance. Additional allowances for specific extraterritorial
expenses may be taxable.
School fees for international schools
The employer may pay a tax-free allowance to cover the school fees for children
attending an international (primary or secondary) school. An allowance for the cost
of private transport (when not arranged by the school) is not tax-exempt. Under
certain conditions, Dutch schools with an international stream also qualify as an
‘international school’ for this purpose. This facility is available for all extraterritorial
employees, also in case the 30%-ruling is not granted.
2.4.4 The non-taxable 30%-allowance
2.4.4.1 Calculation of the 30%-allowance
The tax-free allowance for extraterritorial expenses that can be paid is 30% (at a
maximum) of a specific basis.
2.4.5 Impact of the 30%-ruling on social security and pensionable base
If an employee is compulsorily covered under the Dutch social security system (see
3.2) and the 30%-ruling applies, the basis over which the contributions are cal
culated is reduced. If the contractual gross salary is reduced in view of the tax-free
30%-allowance (see 2.4.2), employee insurance contributions are due over this
lower salary only. Consequently, future benefits may also be lower. Under conditions,
pension rights may be accrued on the full salary (including the 30% allowance)
2.4.6 Partial non-resident tax liability
An employee who is a tax resident of the Netherlands and benefits from the 30%-
ruling can choose whether he wishes to be treated as a resident taxpayer or as a
(partial) non-resident taxpayer.
As a partial non-resident taxpayer, the individual is regarded as a resident taxpayer
for income tax in Box 1. Therefore, on the whole, section 2.2 applies to his situation.
The limited tax liability of a ‘real’ non-resident taxpayer also applies in the situation
of a partial non-resident taxpayer for income taxed in Box 2 and Box 3 (see 2.3).
On the basis of the US-NL tax treaty, US citizens and green card-holders who
have opted to be treated as a partial non-resident taxpayer, are considered ‘real’

Employment in the Netherlands - 2015

Employment in the Netherlands - 2015

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