The Dutch income tax law does not define the term 'resident'
and therefore resident or non-resident status is decided
on a case by case basis. The most important factor in
determining residency status is an individual's economic
tie with The Netherlands; this includes the family home,
employment in the country and entry into the local authority
register.
An
expatriate can apply for for a 30% tax-exempt allowance,
the exemption extends to 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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