The 30%-ruling under the work-related costs arrangement

How does the 30%-ruling work under the work-related costs arrangement? Are the allowances for the relocation costs at the expense of the “vrije ruimte” the up to 1.4% of your salary which is allowed to be given tax free?

Employees that temporarily work outside their country of origin often receive an allowance for the extra costs pertaining to that relocation, the so-called extra territorial costs. This applies, for example, to Dutch employees who are sent abroad or for foreign employees who come to the Netherlands. They will receive these this allowance whether or not it is in the form of the 30%-ruling.

Exemption
The allowance for extra territorial costs is a specific exemption within the work-related costs arrangement. If the allowance is not more than the actual extra territorial costs or 30% of the earnings, the allowance for the extra territorial costs does not compromise your “vrije ruimte”.

The introduction of the work-related costs arrangement does not affect:

• the costs that are considered extra territorial costs;
• the possibility of reimbursing the extraterritorial costs through the 30%-ruling;

If the actual extra territorial costs for one or more employees are higher than the allowance that the employer would pay on the basis of the 30%-ruling, then he keeps the reimbursement of the actual relocation costs per employee in the payroll administration.