In order to apply the 30% regulation for extra-territorial costs, an employer must declare the employee’s wages as ‘einheffingsloon’ (wages subject to a final levy) in the respective payroll tax return. If (s)he fails to do so, the employee may not apply the 30% regulation afterwards in his income tax return, as ruled by the Court of The Hague. The case in question concerned a Danish employee whose employer had failed to apply the 30% regulation when filing the payroll tax return. The employee responded by applying the regulation himself in his income tax return, thus reducing his taxable wages by 30%. However, the court ruled that the employee had violated the law by doing so.
The wages declared in the income tax return must be identical in amount to those declared in the payroll tax return(s). The employer’s failure to apply the 30% regulation in the payroll tax returns could therefore not be corrected by applying the regulation to the employee’s income tax return.
Court of The Hague, June 30, 2021; ECLI (abridged): 1325