Before
1 January, 2001, non-residents of Holland who were offered
employment by a resident Dutch entity could have applied
for preferential income tax treatment which, if granted
by the Ministry of Finance, resulted in 35% of the applicant's
earnings being tax free.
However,
after that date the allowance was reduced to 30% and
the top Dutch tax rate was reduced to 52% from 60%.
Other
improvements included exemption from 30% of social security
tax as well as income tax, and tax-free reimbursement
of school fees for expatriates' children.
The chief
condition which the employee must satisfy is that he
has some specific expertise which is not readily available
in Holland, but this is normally deemed to be the case
for an employee of a multinational corporation.
If the
application is successful the employee can elect to
be treated preferentially for a period of up to 120
months. After 4 years the employer must prove that he
still cannot get a local employee with the expatriate's
specific expertise whereupon the preferential fiscal
status will continue for another 6 years.
If the
employee has lived in the Netherlands prior to the application
then this period of residence will be deducted from
the 10 year period. If the expatriate employee changes
employer he will have to re-submit his application and
establish that the criteria of unavailable specific
expertise still applies.
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