Recently, the Dutch tax authorities announced that they will pay special attention to expatriate-employees, benefiting from the 30% ruling, during their forthcoming wage and income tax audits. Particularly, the tax authorities will focus on the calculations of the taxable income of US nationals within the expatriate group. As a result of the aforementioned we would like to advise you that a review of your payroll administration should take place with respect to the expatriates salaries before the end of this tax year. Below we have briefly outlined the two areas that will receive the special attention of the tax authorities during tax audits.
Expatriates working in the Netherlands and benefiting from the 30% ruling should, in most cases, effectively, pay Dutch wage and income tax on reimbursements of costs that qualify as so-called expatriate expenses. Therefore these expenses must be taken into account in the payroll administration and cannot be reimbursed tax free in addition to the 30% tax free allowance.
With respect to US national expatriates, who work in the Netherlands, the issue is two fold:
Based on the above, we strongly recommend that the 2003 Dutch payroll administration is administered in such a way that:
For all expatriates:
For US nationals:
When paid from the US payroll: