Extraterritorial costs and the 30%-facility
Employees who come from another state to work in the Netherlands often receive an extra reimbursement for the extra costs incurred for their stay away from their country of origin, what are referred to as the extraterritorial costs. You can opt either for the reimbursement of the actual extraterritorial costs incurred by the employee or, subject to conditions, the application of the 30%-facility.
Reimbursement of the actual costs
The reimbursement of extraterritorial costs is a specific exemption (see Allowances, benefits in kind and provisions). When you reimburse the actual extraterritorial costs you will need to ensure that these costs, incurred in reasonableness, are plausible. You then enter the costs and reimbursement for each employee in your payroll records.
Reimbursement using the 30%-facility
When you apply the 30%-facility you may, without furnishing additional proof, reimburse untaxed a maximum of 30% of the wages inclusive of the reimbursement in the form of a specific exemption of the extraterritorial costs. You may also opt to issue the employee 30/70 of the wages exclusive of the reimbursement as a tax free reimbursement. When you also issue the employee extra reimbursements or provisions for the actual extraterritorial costs then these reimbursements or provisions are part of your employee's wages. You may also indicate this salary as final levy wages.
When the actual extraterritorial costs are in excess of the 30%-reimbursement then the actual costs are classified as a specific exemption. However, if you do so then you may no longer apply the 30%-facility.
Annual choice: 30% facility or reimbursing actual costs
Are you eligible to apply the 30% facility? Starting from 1 January 2023, you must make a yearly choice between applying the 30% facility or reimbursing the actual extraterritorial costs. You make this choice in the first payroll period of the calendar year in which you reimburse extraterritorial costs. Your choice applies for the entire calendar year as long as the 30% facility is in effect in that year.
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