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What is the ET scheme?

This is a tax arrangement that makes it possible to give employees who live abroad and temporarily work in the Netherlands a tax-free allowance for additional costs incurred on account of them temporarily working outside their country of origin. The CLA for Agency Workers allows for an employment agency and agency worker to enter into an agreement to exchange part of the wage for compensation of ET costs. This means that an agency worker waives part of the taxed wage in exchange for a tax-free allowance.

The following benefits are eligible for exchange:

  • Part of the time-based wage
  • Days’ holiday over and above the statutory minimum
  • Allowances for unsocial hours and overtime
  • Time in lieu

The following extraterritorial costs qualify for exchange:

  • Double accommodation costs
  • Transport to and from the Netherlands
  • Additional costs of living

Application of the ET regulation must meet the following conditions, among other things:

  • This must be agreed in writing in advance
  • The tax-free reimbursement is limited to actual costs
  • The wage after the exchange may not be lower than the statutory minimum wage applicable to the agency worker
  • The exchange may not exceed 30% of the effective wage.
  • The exchanged part does not affect the basis for overtime and unsocial hours allowances.
  • The maximum exchange wage and the days’ holiday over and above the statutory minimum are 81% of the ET costs (conversion rate 0.81). The conversion rate does not apply to allowances and compensatory hours
  • The amount of the tax-free reimbursement or the value of the provision must be stated on the payslip
  • No reservations can be made on the exchanged part
  • Pension accrual on the exchanged part does apply though

Article 20 of the CLA for Agency Workers

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