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Holiday pay calculation considering 30% tax rule


Question:


I have been living and working in the Netherlands since August 2011 and I got the 30% tax rule since then. I am employed by an agency at the moment and working in an engineering company through them. The agency says that the holiday pay shall be calculated not considering the full gross salary but only the 70% when the employee benefits of the 30% tax rule. This is something new for me and my contract states that the holiday pay is as per 8% of the gross salary.

I worked for three different companies in the past and they always calculated the holiday pay considering the full gross salary although I had the 30% tax rule. According to the agency they are just applying Dutch law but I wonder why other companies will give additional money for free if this is really the case.

Would you be so kind to help me out with this issue?
Many thanks.

Answer:

If the 30% ruling is applied in the payroll administration the salary is formally reduced to a lower percentage, normally 70%. On top of this salary the tax free allowance is paid. The formally reduced salary is the basis for the holiday allowance but also benefits like unemployment and disability benefit. That is why it must be specifically stated in the employment contract or in an addendum to the contract how the 30% ruling is implemented in the payroll administration once it is granted. 

For the holiday allowance it doesn‘t really make a difference since you will get the 30% ruling also on the holiday allowance. So like the regular salary the holiday allowance is reduced to 70% (since it is based on the lower agreed formal salary) and raised again with the tax free allowance. In total you still get 100% of the holiday allowance but a bigger part is paid out net. The agency you are currently working for is correct. 

If previous employers calculated the holiday allowance based on the original gross salary (and on top of that also calculated the 30% ruling) then it is indeed possible that you received more than you would have expected to receive. But that is not your responsibility. 


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Comments (2)
Comment by HananeB on Tue, Sep 27th, 2016 at 3:34 PM
Dear Expat Tax Advisors, I am currently employed in the Netherlands and I have the 30% ruling. I am planning to relocate to the UK in January but I will keep my current position. Since I will be resident there, I have to pay tax to HRMC and I am aware that my employer will be required to set up Payroll in the UK to pay my salary. I would like to know the exact amount of tax I will be paying and what are the possible scenarios which will help me pay less tax especially if the rates in the UK are less than the ones I am paying here in NL. In case I still have to pay tax in NL what is the percentage ? Can I keep my 30% ruling since I will be visiting NL frequently and I also travel a lot worldwide for my work. (up to 15 weeks) annually. My current net monthly salary is 3500 EUR and my annual is around 60K EUR. It will be really helpful for me to have a clear idea what I will be taking home after I relocate. Thank you so much for your help. Looking forward your reply. Hanane
Comment by Arjan Enneman on Tue, Nov 8th, 2016 at 2:38 PM
From the moment you start working in the UK you will have to pay tax on your salary in the UK. I don‘t know what the rates are in the UK so I can‘t answer your question about the tax consequences. You may want to consult a UK tax advisor for this. The 30% ruling will end since there is no taxable salary declared in the Netherlands.
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