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What does the 30% ruling mean?

The employer can reimburse the extra territorial costs of the employee tax free. To be able to do this the employee must hand over all the receipts and the employer must check and approve them. This can lead to a lot of work, especially if more employees are in a similar situation. To make it easier employer and employee can request the tax office (foreign tax office in Heerlen) to grant the 30% ruling to the employee for his activities for the employer. This way the employer can, once granted, pay out a tax free allowance of (roughly said) 30% of the salary of the employee. The 30% allowance will be included in the salary in such way that the costs for the employer will not be higher, while the employee has a higher net salary. The allowance will therefore not be paid on top of the earlier agreed gross salary. If a net salary agreement was made then the benefit will go to the employer.