As of Jan. 1, 2023, the employer must make an annual choice whether to reimburse actual ET expenses or to use the 30% ruling. This choice will have to be made in the first payroll period in which the ET expenses are reimbursed, and applies to the entire calendar year (as long as the term of the 30% rule has not yet ended).
For a 30% decision that takes effect during the year, the timing of the annual choice depends on when the application is made. If the application is made within four months of employment in the Netherlands, the 30% decision will be issued retroactively. Within these four months, the employer can choose per pay period (normally: per month) whether to apply the 30% ruling or to reimburse the actual extraterritorial expenses.
In the time period (the month) following the end of those four months, the employer must make the final choice that applies for the rest of the calendar year. If the application is submitted outside the four-month period, the 30% decision will not be issued retroactively.
Until the effective date of the decision, the employer may only reimburse actual ET costs untaxed; as there is no valid 30% decision for this period.
From the effective date of the 30% decision, the employer must make the choice for the remainder of the calendar year.
Example:
John started at his new employer on Oct. 1, 2023. On Nov. 19, 2023, the 30% application will be filed with the Internal Revenue Service. The 30% decision will be issued with an effective date of Oct. 1, 2023. During the period October 1, 2023 through January 31, 2024, the employer may choose on a monthly basis whether to apply the 30% ruling or reimburse actual extraterritorial expenses. By Feb. 1, 2024, the employer must make the final choice that is valid for the rest of 2024. Starting in the year 2025, the employer must make the choice annually.
Example:
Sarah started at her new employer on Oct. 1, 2023. On Feb. 19, 2024, the 30% application will be filed with the Internal Revenue Service. The 30% decision will be issued with an effective date of March 1, 2024. In the period October 1, 2023 to February 29, 2024, the employer may not apply the 30% rule, but may reimburse actual extraterritorial expenses. By March 1, 2024, the employer must make the final choice that will apply for the remainder of 2024. Starting in the year 2025, the employer must make the choice annually.
