Objection procedures expected following 30% facility cap

3 October 2022

The 2023 Tax Plan includes a further reduction in the 30% facility. Serving as a tax incentive to attract foreign labour to the Netherlands, the facility benefits employees coming from abroad. If they meet all the requirements, the employees can receive up to 30% of their salary as extraterritorial costs free of tax for a period of five years.

On Budget Day (Prinsjesdag), the government announced that the 30% facility would be capped as of 1 January 2024, as a result of which it will only apply to salary not exceeding the 'Balkenende standard' (EUR 216,000 in 2022). The tax benefit for upper-income groups will no longer apply in full because of this cap.

Employees who already apply the 30% facility may rely on a transitional scheme postponing application of the new cap until 1 January 2026. However, employees arriving after 1 January 2021 will be affected by the cap. It remains to be seen whether the cap's substantive retroactive effect can be upheld in respect of 30% facility decisions already issued, bearing in mind the principle of legitimate expectations (vertrouwensbeginsel) and the principle of equality (gelijkheidsbeginsel). It is also unclear at this stage whether the transitional scheme also applies if employees change employers. We expect objections to be made for a large group of employees that cannot use the transitional scheme.

In the light of the above, you may find it useful to further assess the impact of the 30% facility cap on you or your company.


Written by:
Chantal Presilli

Key Contact

Tax Lawyer | Advocaat | Counsel
Wieger Kop

Key Contact

Tax Lawyer | Advocaat | Senior Associate