These clarifications follow a ruling by the Administrative Jurisdiction Division of the Council of State (ABRvS) on 6 December 2023, which raised questions about the consistency of the IND’s policies regarding the salary criteria for highly skilled foreign nationals. The 30% ruling enables employers to provide up to 30% of highly skilled foreign nationals’ salaries tax-free, increasing their net salaries. However, it does not exempt employers from the requirement that highly skilled foreign nationals’ gross salaries meet applicable salary criteria, even when 30% of their salaries do not incur taxes.
Gross salary consideration: The IND emphasised that the gross salary must always meet the applicable salary threshold for highly skilled foreign nationals. The 30% ruling allows for a portion of the salary to be paid tax-free, resulting in a higher net salary for employees, but it does not alter the requirement for the gross salary to meet the threshold.
Net salary agreements: For agreements based on net salary, employers must convert the net amount to gross, factoring in the 30% ruling. If the resulting gross salary falls below the applicable threshold, employers must make necessary adjustments to ensure compliance.
The IND’s recent clarifications carry the following Implications for employers:
- Compliance with salary thresholds: Employers must ensure that the gross salary or the gross amount converted from net offered salary meets the IND’s salary thresholds to avoid jeopardising employees’ immigration status.
- Increased labour costs: Adjusting gross salaries for compliance purposes may lead to higher labour costs, requiring employers to reassess their compensation packages.
- Administrative burden: Accurately calculating gross income in net pay situations, particularly in light of the 30% ruling, may require additional administrative resources and training for HR and payroll staff.
- Legal and regulatory risks: Non-compliance with immigration and tax regulations may expose employers to legal risks, including fines and penalties.
Employers who intend to hire highly skilled foreign nationals may consider these clarifications and update their internal policies as required to ensure compliance and avoid penalties.
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