Housing provided by employer implies that old times have returned on us. In the past the blue colour worker could not afford housing themselves, now it is the white colour worker.
Housing provided by employer
Everything an employee receives from the employer is taxed income. There are some exceptions to this rule. Paying for the costs of housing is not one of them.
In 1989 an employee purchased his own home. The employer reimbursed the employee with EUR 100 per month for reimbursement of extra mortgage interest costs. The necessity of this employee moving closer to his work, did not make the EUR 100 reimbursement tax free according to the court.
Maximum rental fee
The moment that the employer makes housing available for the employee, the maximum rent is limited. The maximum rent cannot exceed 18% of the annual income of that employee.
You attract from abroad a EUR 60.000 gross annual salary costing employee. For that employee the company purchases an EUR 400.000 house at 4% mortgage interest loan. We assume the full amount of the purchase could be loaned and that there are no purchase costs. This is for the ease of the example.
The company pays EUR 400.000 times 4% is EUR 16.000 interest per year. We assume EUR 4.000 more additional costs are involved with the housing. Costs like city tax, small maintenance.
The annual costs is EUR 20.000. The maximum rent that can be charged based on the salary is EUR 10.800. This implies it costs the company EUR 9.200 to gain an employee. Is that a problem? With the current housing market (2022) where the house value increase roughly 15% per year, we think it is a good investment. Even if the housing market is neutral, with the current lack of employees, it is still a good investment.
30% ruling and housing
The 30% ruling is the best tax benefit we have in the Netherlands. That is not the same as the employer being able to pay 30% of the salary tax free and provide free housing. In other words, regardless if you have the 30% ruling, for the housing rent is to be paid.
The benefit for the employer to arrange for the employee housing, either rent or purchase, is multiple. In the current housing market, both rent and purchase, it is very difficult to find suitable housing. Or only less suitable housing is found.
The employer that offers a job with suitable housing is king. King in the sense that this is an attractive offer for employees. Also King with respect to continuity of the employment, if the housing is connected to the employee being employed.
Tax is exciting
We think tax is exciting. This exciting possibility of the employer providing housing with the maximum 18% years’ salary rent, is not being used. We process for a significant number of employers the payroll and only one employer recently inquired about this option. We think this is a great opportunity for the employee. And possibly a good investment for the employer. Whether that is a good investment in the employee or housing market, future will tell.