Expat tax break to be shortened

Expat employees who satisfy certain conditions need not pay tax on up to 30% of their salary. Since 1 January 2019 qualifying workers may use this 30% facility for only 5 years.

Allowance for additional costs

The 30% facility is available to employees who are recruited from outside the Netherlands to work here temporarily. If they satisfy conditions for the 30% facility, they are exempt from paying tax on up to 30% of their salary. This government measure helps them cover the additional costs they incur from working in the Netherlands, such as travel expenses, additional housing costs and day-to-day expenses.

Shorter duration

The government has shortened the duration of the 30% facility from 8 to 5 years. Employees who arrived in the Netherlands in or after 2019 are able to apply the tax break for up to 5 years.

Reasons for the shorter duration

In 2017 the Ministry of Finance had the 30% facility evaluated by an independent consultancy. The conclusions of the evaluation were as follows:

  • About 80% of expat employees use the facility for 5 years or less. Many of the remaining 20% are not in the Netherlands temporarily but stay for a longer period.
  • In other countries with a comparable facility, the tax break is often available for 5 years.
  • The additional costs that the 30% facility is intended to cover decline over time.
  • A shorter 30% facility is less expensive but is almost as effective.