30% facility cannot be applied to a zero hours contract

In a recent ruling the North Holland District Court has determined how strictly the salary requirement under the 30% (expat) facility should be applied. A variation on a zero-hours contract turned out to be insufficient to meet the salary standard.

What happened?

An employee had been applying the 30% facility at his employer’s for some time. When that employment ended in 2024, he switched to a new employer. That transition did not happen all at once. Shortly before the formal termination of his previous employment the employee initially joined the new employer on a zero-hours contract, with an hourly rate of more than €32. A few weeks later a permanent employment contract followed with a fixed monthly salary that was more than sufficient to meet the salary standard for the 30% (expat) facility.

It was only after that permanent contract had been concluded that the employer and the employee jointly submitted a request to apply the 30% facility. The tax inspector, however, refused the request. The tax authorities stated that the salary requirement was not met. The employee did not agree and turned to the courts.

The key question was: at what point should it be determined whether the salary requirement for the 30% facility has been met? Should that be the moment when the permanent contract with a fixed salary is entered into, or the earlier moment when the employee formally joined the company on the basis of a zero-hours contract?

The district court was clear about this. The decisive factor for the 30% facility to apply is whether the employee meets the salary requirement upon taking up the employment. In this case that was when the zero-hours contract began.

Although an hourly wage had been agreed under the zero-hours contract, there was no guaranteed number of working hours and therefore no fixed salary had been agreed. Without an agreed minimum number of working hours it cannot be established what salary the employee would earn on an annual basis. Therefore, it could not be concluded at the time of the assessment that the salary requirement had been met.

That the zero-hours contract was converted into a permanent position with an adequate salary a few weeks later, does not, in the court’s view, alter that  fact. Nor was it apparent from the outset that the employee would directly transfer to a permanent position with an adequate salary. The employee’s appeal was therefore rejected.

This ruling emphasises that the salary requirement under the 30% (expat) facility must be assessed not only materially but also formally. The employment start date is the deciding factor. If there is no agreed salary at that point in time which meets the statutory standard then essentially the scheme cannot be applied.

In practice, this means that hybrid arrangements, such as zero-hours contracts or other flexible entry-level arrangements without a (sufficiently) guaranteed salary, pose a real risk if the 30% facility is invoked (again), even if a permanent contract with an appropriate salary follows shortly thereafter. 

Employers and employees would therefore be well advised to carefully consider the type of contract at the outset when it comes to international appointments or a transfer involving the 30% (expat) facility. What may seem like a pragmatic decision from an administrative or employment law perspective can have far-reaching tax implications.