30% tax exemption for expatriates

The Netherlands has a special tax regime for expatriates.

This so-called ‘30% expat ruling’ is viewed as a reimbursement for the extra costs of working and living abroad in the Netherlands.

It provides an income tax exemption of up to 30%, for a period of up to 96 months.

At Dolk Hesper we help foreign companies to hire their first staff upon start-up in the Netherlands. Often, the first staff is sent out from their own country before hiring local staff. In this process to obtain a tax ruling we work together with several experienced labour and tax lawyers.

In this blogpost, we want to share our understanding of how the 30% tax exemption for expatriates works:

According to this rule, the employer may grant the employee a tax-free allowance of up to a maximum of 30% of his or her remuneration. The remuneration includes incidental and flexible forms of income such as bonus payments and stock options. Termination and pension payments are excluded.

In order to qualify for the 30% expat ruling, the following conditions must be met:

  1. The employer must make a reasonable case that the employee possesses specific expertise that is not available, or is scarce in the Dutch labour market, by meeting the following minimum taxable income levels:
  • minimum gross income of € 50,000 (general requirement)
  • minimum gross income of € 38,007 for masters (MSc) and doctorates (PhD) under 30
  • no minimum income level for scientists and researchers

 

  1. The employee must be recruited from abroad, and the employer must be a Dutch wage tax-withholding agent. The exemption is available for a period of 8 years (96 months). After a period of five years, the tax authorities can request that the employer demonstrate that the employee still meets the conditions.
  1. Employer and employee have to agree in writing that the 30 percent ruling is applicable.
  2. The employee has to be transferred from abroad to a Dutch employer or has to be recruited from abroad by a Dutch employer;
  3. The employee did not reside within 150 kilometres from the Dutch border for the last 18 out of 24 months at the time of hiring;

What to do?

Check if you as employer and your employee would meet the above requirements and consult with a Dutch tax lawyer with expertise on the expat ruling to obtain the ruling from the tax authorities

15 steps to incorporate and start your company in The Netherlands

Business owners, directors or project managers may not feel confident setting up and managing companies abroad.

The first questions they come across are the following:

  • What are the steps to be taken?
  • How long will it take to start with commercial activities?
  • Who can set up the company and manage it in the Netherlands?

At Dolk Hesper we want to share our knowledge and experience sharing with you 15 key steps to follow when starting a business in the Netherlands:

STEP ONE: Clarify the business goals & plan the strategy for the market entry in the Netherlands, Europe or overseas.

Frequent scenarios:

a)     Access the Dutch local market

b)    The Netherlands as gate to Europe

c)     Worldwide investments structured via a Dutch holding company

STEP TWO: Find opportunities and partners, and plan your start.

STEP THREE: Explore the benefits of the legal environment of the Netherlands.

See for more information our blog “The Netherlands: key sectors, business, legal and tax incentives”

STEP FOUR: Plan your company structure and choose the legal form:

  • Private Limited Liability Company (BV),
  • Public Limited Company (NV)
  • Further options: Limited Partnership (CV), a Foundation (Stichting), Partnership (Maatschap), Commercial Partnership (VOF) or register as a one man business (ZZP).

STEP FIVE: Find an address for your company.

STEP SIX: Find a local director or company secretary who keeps your company in good standing and complies with Dutch corporate law requirements.

STEP SEVEN: Request draft of the Articles of Association in accordance with Dutch law.

STEP EIGHT: Incorporation: incorporate your company before the Notary Public.

STEP NINE: Registration at the Trade Register and Tax Authorities.

STEP TEN: Open a bank account and obtain internet banking access.

STEP ELEVEN: Draft a Shareholder’s Agreement, if necessary.

STEP TWELVE: Find an accountant who understands your business, communicates in your language and is used to work internationally.

STEP THIRTEEN: Arrange insurances.

STEP FOURTEEN: Permits and licences (if applicable).

STEP FIFTEEN: Employment of local or foreign employees, contracts and payroll. Please note that if you employ expats you may consider applying for an expat ruling, arrange housing, get local coaching, etc.

 

At Dolk Hesper we are specialized in setting up companies and managing international companies. We offer tailor-made solutions for your business. Please do not hesitate to contact us should you be interested in starting a business in the Netherlands.

Update Dutch employment contracts as per 2015

As per 1 January 2015, the Netherlands introduced new legislation with respect to labour contracts.

At Dolk Hesper we often help foreign companies to hire their first staff upon start-up in the Netherlands. In this process we work together with several experienced labour lawyers.

In this blogpost, we want to share our understanding of the most important changes in Dutch labour law:

Notice of termination labour contract

Up until 2015, an employment contract for a definite period of time terminated automatically. No written notice of termination needed to be given and no severance compensation needed to be paid. However, from 1 July 2015 this will change for employment contracts for a definite period of time of 6 months or more. The employer needs to notify the employee in writing ultimately 1 month in advance that the employment contract shall either terminate automatically or if the employer wishes to extend the employment contract, under which conditions this extension is offered. A failure on the part of the employer to do so will result in damages on the part of the employer, amounting to 1 gross monthly salary (if no notification is given), or the salary over the period of delay (if notification was not given in a timely manner).

To avoid confusion: this notification is not to be confused with notice of termination. In other words, a failure to provide (timely) notification to the employee does not prevent the employment contract for a definite period of time from terminating by operation of the law upon expiry of the contractual term; it ʹmerelyʹ results in an obligation to pay damages to the employee.

What to do?

Keep an overview of the expiry dates of their employees contracts and the deadline for sending a notification. Also, have a standard notice letter in place.

Trial period in labour contracts

As per 1 January 2015 fixed-term labour contracts for 6 months or shorter can no longer contain a trial period.

What to do?

If you want a trial period for your first employees, either offer a contract for 9 or 12 months (with 1 month trial period), or a short contract of 3 months.

 

Competition clause in labour contracts

As per 1 January 2015 it is only advisable to take up competition clauses for permanent labour contracts. For fixed-term contracts, the employer must show very strong business reasons that must be taken up in the written competition clause.

What to do?

If a competition clause is crucial for your type of business, it might be best in your case to offer a permanent labour contract to your first employee.

 

Automatic conversion into permanent labour contract

As per 1 January 2015, a permanent labour contract comes into being when 1) the fourth contract commences, or 2) when the period of two years is exceeded. However, one fixed-term contract with a longer term than two years is still possible.

What to do?

Keep an overview of the labour contracts that you offer your employees with expiry dates.