Hilfort insight blog

In today’s competative job market, finding the right candidate sometimes means looking beyond the borders of the Netherlands and the European Union. But Dutch law makes it so that many companies are unable to hire the perfect candidate when they’re from a country like the United States of America or India. Only companies labeled by the Dutch immigration services as a recognised sponsor are allowed to hire these types of candidates. Being a recognised sponsor with the Dutch Immigration and Naturalisation Service (IND) allows companies to hire skilled foreign nationals while simplifying the visa, work permit, and application procedures.

What is a recognised sponsor and why do you need it?

A recognised sponsor is an organisation that has been officially approved by the IND to employ skilled foreign nationals. The foreign nationals include highly skilled migrants, researchers, and au pairs who want to work in the Netherlands. Recognised sponsors come in two main categories. The first category is a company that wants to hire foreign nationals and has the time, money, experience, and knowledge to do the lengthy procedure of becoming a recognised sponsor and hire their perfect candidate(s). The second category, to which Hilfort belongs, are companies who’re specialized in being a recognised sponsor. We act as a bridge between a job posting and the perfect candidate and make sure that alle conditions and requirements are met.

There are entry barriers for a new company that is less than 3 years old. The Dutch ministry (Dutch government) and IND require a company to follow a different, more lengthy procedure to become a recognised sponsor. The Netherlands enterprise agency (RVO) is asked for advice about these organisations regarding their cash flow and their continuity and solvency. So, one of several advantages for older companies is that they can follow the more simple procedure and aren’t subject to the Netherlands enterprise agency (RVO).

Obligations and Responsibilities of a Recognised sponsor

The Immigration and Naturalisation Service (IND) holds recognised sponsors to high standards both to become a recognised sponsor, but also to hold that position and stay on their public register. Some of the most important legal obligations and responsibilities of a recognised sponsor are:

• Recognised sponsors must notify the IND of changes that have consequences for the residence permit of the registered highly skilled migrant or the recognition as a sponsor.
• Recognised Sponsors must continuosly retain the details of all their highly skilled migrants on staff.
• Recognised Sponsors have a responsibility to uphold the standards and set requirements for employees being hired as highly skilled migrants.

Breaking IND Obligations and Non-compliance

It is the perogative of the Immigration and Naturalisation service (IND) to check at any time whether a recognised sponsor complies with the rules. The investigated company needs to hand over the requested documents and prove that they are still in compliance. If for whatever reason the company doesn’t comply with the rules (e.g. by having a highly skilled migrant on the payroll who earns less than minimum wage or not following the minimum holiday allowance act), the Dutch immigration service (IND) is allowed to take one of the following actions:

• Warning and governmental fine: The first time that a company fails to comply with the rules a warning is generally issued, informing the company about the possibility of losing their recognition and the consequences for the company and the highly skilled migrants in employment with them. With subsequent violations, the IND requires a company to pay a fine. The height of the fine depends on the seriousness of the violation and the number of violations in years prior.
• Suspension or withdrawal of recognition as a sponsor: If the recognised sponsor does not comply with the rules or no longer meets the conditions for recognised sponsorship, the IND can withdraw the recognition and remove the company from the IND website. Additionally, they can ban the organisation from restarting the application process of recognised sponsor for up to 5 years.
• Withdrawal of residence permits: When a company has lost their recognition as a sponsor, the IND may also withdraw the residence permit of highly skilled migrants who are in employment with this company.

Advantages and benefits of being recognised as a sponsor

There is one core benefit to being a recognised sponsor. You are now a legal entity to hire candidates from across national borders! Your name is on the IND website public register. You can start the application procedure for your highly skilled migrant their residence permits online. But there’s more:

• Accelerated application procedure: The IND aims to process applications from a recognised sponsor within two weeks, which is significantly faster than the standard 90-day timeframe.
• Reduced administrative burden: When submitting applications, a recognised sponsor needs to provide fewer supporting documents. Often, a self-decleration stating that the individual meets all requirements is enough for the IND to consider the highly skilled migrant sufficiently guaranteed.
• Online application options: A recognised sponsor can submit residence permit applications online through the IND’s Business Portal. This makes the entire process far simpler and faster.
• No minimum or maximum number of applications: There is no requirement for a minimum or a maximum number of applications per year. It is entirely up to the recognised sponsor how many times they start the application procedure.
• Acces to dedicated support lines: As recognised sponsor, a company has acces to specialized information lines and email support for assitance with questions about the application form or other questions related to applications.

Outsourcing sponsorship and employment of record (EOR)

Looking to hire a highly skilled migrant, but hesitant to become a recognised sponsor? Hilfort can help you hire the highly skilled migrant! We’re recognised as a sponsor and we’ve been recognised as a sponsor for over a decade. Our team consists of experts in their field, not just because they learned the trade but also because they lived it (i.e. part of our team are expats).

So what is that we offer? All the way at the start of the article, two groups or options were mentioned. Hilfort belongs to the second categorie. We hire expats on our payroll, and then we sign a contract with you stating that the employee may only work for you. In the Netherlands, this concept is called payrolling. It isn’t just the hiring process in which we help. Whether it’s taking care of the payroll taxes, a question from the expat regarding the status of their IND application form (which we have already submitted), or anything else related to expat during the entire length of their contract(s). We make this whole process worry-free and stress-free, because the highly skilled migrant applications are a relatively simple procedure when you’ve got the right people and the time and energy to put into it.

To become a recognised sponsor is just the first step for the company. After the company gains their recognition and their spot on the public register, they still have to guide the expat through numerous other steps before everyone can get back to work. We’ve written a blog on a number of things expats need to keep in mind while moving to the Netherlands. This will help your company keep track.

Recognised sponsors, immigration and naturalisation service, and highly skilled migrants; Let’s sum it all up

You’ve found your perfect candidate, but they live abroad. They need a work permit, but right now you can’t help them obtain that work permit. If you want to become a recognised sponsor, you most likely have to worry about proving your cash flow in years prior, your continuity and solvency, and more. It’s a lengthy procedure. For your company, the recognition as a sponsor might not even be neccesary. It’s not just a big task to get the recognition from the IND. It’s keeping up with it that will be the real timesink. So allow Hilfort to take that burden from you. This is our field of expertise, and we gladly take care of it for you. That way, you can focus on what truly matters: Your own core business.

Moving to a new country can be a real challenge. The 30% tax ruling makes it a bit easier for expats coming to the Netherlands. This tax advantage helps to save on the extra costs of living and working abroad. In simple terms, your employer can compensate your so-called ‘extraterritorial costs’ tax-free. The option to apply for the ruling makes the Netherlands an attractive destination for skilled professionals who are interested in a tax-free allowance and it also helps to develop Dutch labour market. Let’s talk about the 30% ruling: when it’s applicable, how it works, and how you can benefit from it.

What is the 30% ruling?

The 30% ruling is a tax benefit for employees who come to work in the Netherlands from abroad. Essentially, it allows employers to pay up to 30% of gross salary tax-free. This can significantly increase employee’s take-home pay. However, starting from January 2024, there’s a cap on the maximum amount you can receive tax-free, set at 30% of €233,000 for 2024, or €69,900 per year.

This cap means that the higher your salary, the more significant the impact of the cap will be on your tax-free allowance. For high earners, this change might reduce the overall benefit of the 30% ruling, but it still offers considerable tax savings.

Who qualifies for the 30% Ruling?

To be eligible for the 30% ruling, you must:

• Be recruited or transferred from abroad (you must not have lived within 150 kilometres of the Dutch border for more than 16 months in the 24 months prior to your first working day in the Netherlands). This means you can’t have lived in Belgium, Luxembourg, or parts of Germany.
• Have specific expertise that is not readily available in the Dutch labour market.
• Meet the income criteria. In 2024, your salary, excluding the tax-free allowance, should be more than €46,107 (or €35,048 if you’re younger than 30 and hold a Master’s degree from a recognized university).

There are exceptions for scientific researchers and doctors in training. These categories can apply for the 30% ruling regardless of their (lower) salary.

Changes to the 30% rule in 2024

Here’s the kicker: Your maximum compensation is no longer 30% over the entire term. From January 2024, you’re only entitled to a maximum compensation of 30% of your salary for the first 20 months of your decision. For the second 20 months, you’re entitled to 20%, and for the third 20 months, you’re entitled to 10%. If you already had a decision in 2023, you can still be entitled to a maximum untaxed compensation of 30% for the entire term. There is a transition period for those employees, who already enjoy the ruling, depending of when they got it approved.

Hilfort’s advisors are happy to explain you more in regards to your (or your employee’s) situation.

Benefits of the 30% ruling

The 30% ruling is meant to help expats with there transition to the Netherlands. These are the main benefits:

• Financial savings: when moving abroad, expats may experience difficulty adapting to the new culture, environment and financial expectancies. The 30% ruling helps buffer the financial adjustments. With the income tax-free adjustment that helps expats safe money and adjust to living in a new environment.
• Convenience: there are more benefits for highly-skilled migrants wi ruling, for example they can simply change their driving license and don’t need to pass the exam.
• Tax status: sometimes you could be eligible for partial non-resident status, which can result in benefits for income tax on savings and investments.

Applying for the 30% ruling

The application process is quite straightforward:

1. Application: Together with your employer you submit an application to the Dutch tax authorities.
2. Required documents: Provide necessary documents. E.g.: documents that show that you’ve being recruited from abroad, details of your education, employment contracts. By providing the requested documents you are submitting the necessities to validate the 30% ruling request. The tax authorities can then validate your request for the tax exemption by conducting the necessary checks.

We would recommend to start the application process as soon as possible. Discuss the timeline with your employer (or Hilfort). Early submission helps to start benefiting from the ruling without delay. But you always have an option to apply within 3 months after the start date. It is important to know, that first salaries you get in the Netherlands will be applied without the ruling, as the authorities need time to approve it. But as soon as the decision is ready, you will get your money back retrospectively. The average decision making time is 14 weeks.

Changes towards 2027

Starting from 2027, the 30% ruling will transition into a 27% ruling. This means that expats will only be able to receive 27% of their gross salary tax-free instead of 30%. Additionally, the salary threshold will be increased, making it more difficult for newcomers to qualify for the ruling. A transitional arrangement will be in place for expats who obtained the 30% ruling before 2027, allowing them to keep their 30% benefit for the duration of their original term. Expats entering after 2027 will need to meet the new thresholds and conditions to benefit from the reduced 27% ruling.

Common Questions

Can the 30% ruling be applied retroactively?

Yes, if the application is submitted within four months of starting your job, it can be applied retroactively. This flexibility ensures you don’t miss out on benefits if there’s a delay in the application process.

What if I change jobs?

You are still eligible to the 30% ruling if you switch within 3 months. However, the new employer should sent a new application. If you switch employers within three months, the ruling can continue with your new employer under certain conditions. This continuity makes it easier to maintain your tax benefits without significant disruptions.

Does the ruling apply to bonuses?

Yes, it can be applied to bonuses as part of your taxable salary. Including bonuses can further enhance your financial savings under the ruling.

How long is the decision about the 30% ruling valid?

The validity depends on when the decision was issued. For decisions issued between January 1, 2012, and January 1, 2019, it is valid for eight years. For decisions issued as of January 1, 2019, it is valid for a maximum of five years. Understanding the validity period helps in planning your long-term stay and financial strategies in the Netherlands.

Practical Tips for Expats

1. Financial Planning: With the phased reduction in the tax-free allowance, it’s pivotal to plan your finances. Maximize savings and investments during the initial 20 months when the tax-free allowance is highest.

2. Legal and Tax Advice: Consulting with a tax advisor or legal expert can help you navigate the complexities of the ruling and ensure you comply with all regulations.

3. Relocation Assistance: Many expats will find help of dedicated professionals useful while changing the countries. Hilfort is glad to assist in all the payroll and ruling questions.

4. Networking: Joining expat communities and professional networks can provide support and valuable information about living and working in the Netherlands. These networks can also offer insights into making the most of the 30% ruling.

Conclusion

The 30% ruling can make a big difference in your finances as an expat in the Netherlands. And even though the upcoming changes will have an impact, the 30% ruling still offers substantial benefits. For more details or if you want to know more about how to apply, feel free to reach out to us at Hilfort. You can also approach us with other questions, like the Dutch employment law. Our experts will make your stay in the Netherlands hassle free.

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Still curious about how the 30% ruling can benefit you? Or perhaps you need a hand navigating the application process? Contact Hilfort today! We’re here to help you make the most of your move to the Netherlands. With our expertise, you can enjoy the financial benefits and ease into your new life with confidence.

Recently, we published a post on LinkedIn about the changes regarding the 30% ruling that were expected to be announced on Prinsjesdag (Budget Day). Our expectations, which you can read about in part 1, were confirmed. However, that doesn’t mean that a new law came into existence, that still requires extensive voting. We do expect these changes to the 30% ruling to make it through the voting and be implemented in the next few years, possibly with some minor adjustments here and there.

What do we know now?

As mentioned earlier, the 30% ruling will eventually change to a 27% ruling. This will not happen in 2025 but as of January 1^st, 2027. This means there will be a transitional arrangement in several areas, which we will explain in detail shortly. The salary threshold will also be significantly increased, so that incoming employees—the so-called expats—will be less likely to qualify for the brand new 27% ruling.

Enough talk. How will the next few years look like?

There will be transitional arrangements in several areas. We have summarized them for you, including changes that are already relevant as of this year (2024)!

2024:

Employees who are eligible to apply for the 30% ruling in 2024 or earlier will retain the 30% rate for the entire duration of the 30% ruling (usually 5 years or 60 months). The start date of the ruling is decisive and must include a start date in 2024 or earlier, even if the ruling is issued retroactively in 2025.

For example, an employee who receives a 30% ruling that starts on December 1^st, 2024, will retain the 30% tax benefit until November 30^th, 2029. The increased salary threshold will not apply to this group and will remain based on the current indexed salary threshold. This also applies to incoming employees under the age of 30 and in possession of a recognized master’s degree.

The previously announced reduction measures (from last year) are therefore completely off the table.

2025 and 2026:

Employees who receive their 30% ruling in 2025 or 2026 will already be part of the new regime, but will still enjoy the 30% benefit in both 2025 and 2026.

These employees will have a separate transitional arrangement, as they will receive a reduced benefit of 27% instead of 30% starting in 2027 but will not have to meet the increased salary criterion by 2027.

2027:

Everyone who becomes eligible for the 30% ruling after 2027 will receive only a 27% benefit and must meet a higher salary threshold, which will be indexed in the intervening years. Currently, the higher threshold is set at €50,436 (in 2024, it is €46,107), and the under30 version is set at €38,338 (in 2024, it is €35,048). It doesn’t make much sense to put too much stock in these figures as of yet, since they will be indexed in the coming years, the legislation won’t take effect for another two years, both chambers (2e kamer en 1e kamer) still need to approve it, and historically we’ve seen that until the law is written it is bound to be (slightly) altered.

In short, we now know that earlier measures will be reversed and that for the next two years not much will practically change. In 2027, if everything takes shape as is projected in this article, payroll administrators will face a greater challenge to keep track of which employees are still entitled to the 30% ruling and who has to settle for the 27% ruling if they make the salary threshold. Fortunately, you know where to find us by now, right?