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As a newly recruited and internationally sourced employee, my employer and I can apply for a 30% free renumeration (aka tax free) exemption on my Dutch wage. Why is that? My short answer is:

It is an agreed tax accounting shortcut for some classes of internationally sourced people (in my case, a scare expert) to acknowledge the extra territorial costs incurred in my being hired in Holland. This blanket number assessment removes a lot of burdensome accounting and is an agreed suitable estimate.

So there you have it.

Unless you wanted the long answer?

Do you?

Well here is my interpretation of the verbose legal-ese documentation that describes this ruling. I know that English legal documents are hard to read, but let me assure you, translated legal-ese is even harder! The section of legislation I read is entitled:

BULLETIN OF ACTS AND DECREES 640

Decree of 20 December 200 for the Amendment of Several Implementation Decrees

Article II: Amendment to 1963 Implementation Decree for Wage Tax - Section 3

I hope this is enough of a citation. Article 8 lists the definitions of the terms covered in the section. I am considered an extraterritorial employee (employees who have entered … the county - Article 8 2.a) and an entered employee as per Article 8 2.b; someone who is employed internationally, and have “a specific expertise that is scare or absent on the job market in the Netherlands”. I think my skills are scarce, but lets see how it is assessed.

Article 9a 1. Covers the assessment of specific expertise. They list specifically: level of education, relevant previous experience and a comparison of salaries of previous and current position. I would like to think these would all go favorably for me.

Article 9a 2. describes automatic approval of specific expertise.  The test is:

if ( ( position >= ("middle management" of an "international concern" ) ) AND relevantExperience >= 2.5Years ) specificExpertise = true;

Yes I know this is a very nerdy way to put it (and that it should have unit tests). I don’t know if this applies, as the definition for international concern and middle management are in different sections. So I might get automatic approval, or I may need to demonstrate the factors for assessment.

Article 9b talks about the rules for duration for an entered employee; its basically a cumulative 10 year maximum for this ruling. Maybe after that I’m considered completely Dutch ?

For completeness; as per Article 9c I could transfer this ruling to a new employer as long as the new employer and I submit and pass the same approval process. Article 9d notes that re-assessment might be imposed after 6 years. Article 9e details the assessment of your cumulative year count, Article 9f notes the 4 month retrospective amnesty. The ruling starts the next calendar month otherwise - Article 9g, 9h.

Note that this is specific to wage-like earnings (regular pay for extraterritorial work). It specifically excludes other payments like golden handshakes and pensions. Another important thing to note is that I am welcome to present documented accounting for my true extraterritorial costs and get the resulting reduction. If I could demonstrate 60% costs, I could get 60% tax free assessment. Anyone know a good creative accountant ;)? In reality I’ll just go with the 30% option and avoid the complication.

So there you have it; my interpretation of the rules.

This entry was posted on Friday, April 11th, 2008 at 12:02 am and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.