Tax Breaks for Expats

Payrolling & HR

Moving, living and working in a foreign country can be stressful and expensive. Luckily, there are some countries that know this and are willing to help expats out with some tax breaks to help get you on your feet in your new home. While these tax advantages will expire within a few years after you arrive into your new home, the savings in those crucial first few years can make or break a move abroad. In this blog, we will talk about some of these tax advantages that Denmark and the Netherlands provide for new citizens.

The Netherlands has a special tax regime for expatriates called the 30% reimbursement ruling (or better known as the 30% ruling. This is a tax advantage for highly-skilled migrants moving into the Netherlands in order to fulfil a specific employment role. According to this ruling, the employer may pay the employee a tax-free allowance that does not exceed 30 percent of the employee’s total remuneration. This allowance is to be used for expenses associated with moving and living in the Netherlands due to the employment. Additionally, the employer may reimburse the fees for the employee’s children to attend an international school tax-free as well. The ruling may be applied for and granted to a maximum of 8 years. However, there is talk this may be reduced in the next few years.

In order to receive this ruling, the employee and employer must qualify for the following conditions:

  • Employee has specific expertise which is rare or unavailable in the Dutch labor market.
  • Employee must be recruited from abroad. In order to satisfy this requirement, the employee must have resided outside a 150 kilometer radius of the Dutch border for two-thirds of a 24-month period immediately prior to their employment.
  • Employer must be, or appointed as, a Dutch wage tax-withholding agent.

Another country that provides tax advantages to foreign researchers highly-skilled expats in Denmark. Expats assigned in Denmark can opt 31.92% gross tax rate for a total of 60 months (5 years).  This rate is calculated by a 26% flat tax rate plus labor market contributions. It is important to keep in mind that only certain things will be taxed at this rate. These include:

  • Cash Remuneration
  • Taxable value of company car
  • Taxable value of company paid telephone
  • Taxable value of company paid health insurance

All other income, including other benefits will be taxed at the ordinary tax rates.

Like the Netherlands, there are some qualifications that must be met in order to receive this tax rate. The employee become a resident in Denmark in connection with the commencement of employment. The employee must also not have lived in Denmark in the ten-years prior to the start of employment. As this is only a tax advantage for highly-skilled workers and foreign researchers, there is a minimum salary associated with it; the minimum gross cash salary (including value of benefits) must be at least DKK 63,794.65 average per month. In addition to these requirements, the employer must be a Danish entity or a foreign entity with a permanent establishment in Denmark.

This is just a sample of a couple of the countries with tax advantages for foreign workers. If you’re working in the Netherlands or Denmark and have questions about how to receive these advantages or have questions if the country where you’re located has similar tax advantages that could be offered to you, feel free to contact us at info@got.international and our experts will answer your questions within 24 hours.