The 30% facility and the 2024 tax return

If you come to the Netherlands to work, you incur additional costs. These could be living expenses, travel expenses to your home country or advisers’ fees. These additional costs are referred to as ‘extraterritorial costs’. 

If you meet the conditions, you and your Dutch employer have agreed to pay 30% of your salary tax-free rather than issue tax-free reimbursements of the costs you actually incur. To get this tax break, you and your employer submitted a request to the Dutch Tax and Customs Administration (Belastingdienst). Since 2024, there has been a cap on the amount of salary that employers may pay tax-free.

The Belastingdienst approved your request because you have specific expertise that is scarce or unique in the Dutch labour market, or because you’ve been seconded to the Netherlands as part of a job rotation scheme at your multinational company. As this is a temporary situation, the Belastingdienst has granted you the tax break for a period of at most 5 years.

The 30% of your salary that’s paid tax-free is formally considered a ‘tax-free allowance.’ Strictly speaking, this means that it’s not considered part of your salary. Your employer therefore doesn’t have to withhold any payroll tax from this allowance, and you don’t have to declare the allowance on your income tax return. 

If you hadn’t yet used the 30% facility in 2022, your ‘tax-free allowance’ for 2024 is capped at € 69,900. If you had already used the 30% facility in 2022, this allowance cap applies only from 1 January 2026.

If you’re using the 30% tax facility, you may wish to opt for ‘partial foreign taxpayer status’. This option is laid down in the Dutch Income Tax Act and means you can choose to be treated as a non-Dutch tax payer for certain parts of your income. As a result, you won’t have to declare your assets – apart from any real estate you own in the Netherlands – in box 3 (income from savings and investment) on your Dutch tax return.  

For all other purposes, such as your taxable income from work and home ownership (box 1), the partner scheme, and how you allocate income components between yourself and your tax partner, you’ll be taxed as a Dutch taxpayer.

Partial foreign taxpayer status is an option you choose on your income tax return by answering the questions about box 2 and box 3 as if your assets were subject to tax in another country. You can choose this option every year as long as you qualify for the 30% tax facility. Starting in 2025, you’ll no longer be able to use this option unless you qualify for a transitional arrangement. 

We’ve outlined above what the 30% tax facility is. However, this is a simplified description of a complex scheme. You might also receive earnings from or have assets in multiple countries. If so, you need to find out in which country you must file your tax return and pay tax.

Please be aware that the Dutch government has restricted the 30% facility. And from 2025 onwards, you can no longer claim partial foreign taxpayer status unless you qualify for a transitional arrangement. We recommend that you always get solid advice from an expat tax adviser, including on filing your 2024 income tax return.