Evaluation of 30% facility published | Deloitte

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Evaluation of 30% facility published

The evaluation of the 30% facility, commissioned by the Ministry of Finance, shows the allowance to have accomplished most of its intended effects. Still, there are areas of improvement as well.

28 June 2017

Dutch version

What is the 30% facility?

Under the current facility an employer can designate 30% of the wage including the allowance as a tax-free allowance. This should compensate for the extraterritorial costs incurred by its foreign employees. The amount of the costs effectively incurred does not affect the amount that the employer can report to the tax authorities for the facility.

The employee must have specific expertise that is not or is only barely available on the Dutch employment market. Such expertise is reflected in a salary of at least EUR 37,000 (2017). The salary standard is lower if the employee has a Master’s degree and is under the age of 30 (2017: EUR 28,125). If the employee conducts scientific research there is no salary standard. Some of the adjacent schemes to attract foreign employees include the right to opt for partial non-resident tax liability and the highly skilled migrant scheme.

Of the countries surrounding the Netherlands only Germany has no such facility. Compared with nine neighbouring countries, there are a few points on which the Dutch facility is quite extensive. Both the target group and the limitation of the extraterritorial costs are well above the average. What’s more, the term (eight years) is longer than the usual five years in the neighbouring countries.


Who are using the facility?

Approximately 5% of the employers use the 30% facility. Of them, 1% (so 0.05% of all employers in the Netherlands; 171 companies in total) is responsible for hiring no less than 43% of the employees who use the facility.

The researchers state that an employee with an average wage is likely to pay around 29% of extraterritorial costs. As from a wage of EUR 50,000 (excluding the allowance) the percentage drops to 20% on average. And as from a wage of EUR 100,000 (excluding the allowance) the percentage of extraterritorial costs is even only 6% on average. So, highly paid employees incur proportionally less extraterritorial costs and benefit most from the facility.

As it is much easier to apply the 30% fictitious amount and reporting the extraterritorial costs effectively incurred to the tax authorities is generally not more beneficial, employers and employees rarely do so.


Effect of the facility

The facility especially reduces the administrative burden and helps to attract employees with scarce specific expertise to come to the Netherlands. According to the researchers any displacement of Dutch employees as a direct consequence of the 30% facility is limited, as the criteria prevent employers/employees from always benefitting from the facility in the best possible way.

On top of that, the facility helps maintain the attractive business climate for internationally oriented employers that are relatively labour-intensive and/or depend on high-quality scarce labour to a relatively large extent, as is the case with, e.g., head office functions.

Indirect effects are the “spillovers” of knowledge, innovation, and networks (international and otherwise), especially where this involves employers engaged in innovative research and business operations. The researchers state that the 30% facility is an efficient policy tool: all in all the facility brings in more than it costs.


Improvement areas

Although the 30% facility has been found to be both effective and efficient, the researchers state that a few adjustments may positively influence the effectiveness and efficiency of the facility. They particularly refer to:

  • a reduction of the period to five or six years; 
  • an increase of the 150 km limit;
  • a reduction of the fixed sum for income in excess of EUR 100,000. 


The researchers consider other adjustments to be less obvious, such as a change of the fixed rate.

Finally, the researchers note the scope of the extraterritorial costs. Although the 30% facility currently factors in the higher, or much higher, cost of living in the Netherlands (compared with India, which provides the largest group of foreign employees), it nevertheless excludes the higher, or much higher, income in the Netherlands.


Source: Appendix Evaluation the 30% facility

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