What you need to know: extraterritorial costs and school fees
When the 30% ruling is granted and applied to an employee’s payroll, this is considered as reimbursement for any extraterritorial costs incurred by the employee in order to take up employment in The Netherlands. As a result, extraterritorial costs can not be reimbursed again untaxed separately.
Extraterritorial costs include:
- the additional cost of living in The Netherlands in comparison to the employee’s country of origin, such as additional expenses for meals, gas, water and electricity (cost of living allowance)
- the cost of a familiarization trip to The Netherlands, possibly with their family, for example, to search for a home or school
- the costs of applying for or converting official personal documents such as residence permits, visas and driving licenses
- the cost of medical examinations and vaccinations required for their stay in The Netherlands
- double housing costs e.g. hotel costs if the employee remains living in their country of origin
- Dutch housing costs: If the employer provides housing to the employee only the (first) housing costs above 18% of their wages from their current employment are considered extraterritorial costs. The rest of the costs are considered a form of salary. If the employee decides to rent accommodation, the 18% percentage rule is also applied. Employers are not allowed to reimburse or provide an untaxed allowance for furniture costs. Any furniture allowance must be taxed.
- storage costs for household effects that are not moved to The Netherlands
- travel costs to the country of origin, for example to visit family or for a family reunion
- the additional costs incurred by employees to complete an income tax return in The Netherlands if it is more expensive than the declaration filed by a similar tax advisor in the country of origin. This applies to a maximum of Euro 1000 per employee.
- Dutch language course fees for the employee and accompanying family members
- additional (non-business) charges for telephone calls to the country of origin
- the cost of an exemption request for social security contributions, such as an A1 or E101 statement
School fees are however an exception to this rule.
Alongside the 30% ruling, an employer can provide an untaxed reimbursement for international school fees provided the training in the international department or school is based on a foreign education system, and the school or department is in principle only accessible to children of deployed employees.
If the school attended by your children meets these criteria, then your employer can reimburse the school fees to you untaxed.
Questions for our Expat Desk?
Do you have any questions concerning extraterritorial costs? Please do not hesitate to contact us at [email protected], and we will be happy to help.