30% ruling Netherlands
The 30% ruling Netherlands is to stimulate that knowledge migrants will choose for the Netherlands to work.
Most of the expats have heard of the 30% ruling Netherlands.
There aren’t many expats who know exactly how the 30% ruling Netherlands works.
Let’s go through the basic rules and requirement.
What is the 30% ruling Netherlands?
The 30% ruling Netherlands is a tax advantage for foreign employees working in the Netherlands.
If a number of conditions are met, the employer is allowed to grant a tax free allowance amounting to 30% times 100/70 of the gross salary subject to Dutch payroll tax.
This results in a maximum (effective) tax rate of approximately 36.4%.
This tax free allowance is considered as compensation for expenses a foreign employee has for working
outside their home country.
Other benefits 30% ruling Netherlands
Beside the fact that 30% of your salary will be paid tax free, there are also other benefits.
30% ruling and Box 3 income tax
Under the 30% ruling you can opt for ‘partial non-residency status’.
You are then considered to be a non-resident tax payer in Box 2 and Box 3, even though you are living in the Netherlands.
For Box 1 income you are considered a resident tax payer, therefore you do not pay income tax on assets in Box 2 and 3
(except for real estate located in the Netherlands and substantial shareholding in a Dutch resident BV) and you are
entitled to the partnership ruling in Box 1.
If you have a foreign driving license, in most cases you will still have to redo your test in order to obtain a Dutch license.
If you benefit from the 30% ruling, it is possible to switch your foreign driving licence without retaking the test.
Points of attention 30% ruling Netherlands
The 30% ruling will become effective in retrospect if the application is submitted within 4 months after the
commencement of your employment contract.
If the application is submitted after 4 months, it will become effective as of the first day of the month following the
month of application.
The maximum duration of the ruling is 8 years (was 10 years) and will be reduced by other periods you
have stayed in the Netherlands.
After 5 years the tax authorities may ask the employer to prove that the employee still meets all the conditions.
If you change jobs you can reapply for the ruling, provided that you still meet the conditions regarding specific skills
and you start this new employment within 3 months of terminating the previous one.
Forgot to apply for the 30% ruling ?
It is a shame, for the years you missed but it is still well worth trying to obtain the 30% ruling.
The tax authorities will reduce the total duration of the ruling with the period you have already resided in the Netherlands.
That may still mean a considerable period of the maximum 8 years you can receive the benefit.
Criteria for application 30% ruling Netherlands
– Incoming employee. An employee that is seconded to the Netherlands or is recruited from abroad;
– Having specific expertise that is scarcely available on the Dutch labor market.
Check on the following criteria:
– Level of education;
– Relevant working experience;
– Salary level
– Application is filed with the Dutch tax authorities and the 30% decision is received;
– Reference period: maximum 8 years;
– Rules reducing application period;
– Period is reduced with prior periods of employment and stay in the Netherlands;
– Periods ended more than 15 years ago are not taken into account;
– Periods between 10 and 15 years are not taken into account if certain conditions are met;
– The 30% ruling is applicable to wage from current employment;
– Dutch tax authorities can check after 5 years whether the conditions regarding scarcity and specific expertise
are still met or not.
This is a brief overview of the criteria.
If you want more specific information about the 30% ruling criteria, read below.
Requirements 30% ruling Netherlands
The expat must be an employee who is hired in another country by an employer or sent to an employer within the same group
of companies at management level, with a specific expertise that is scarce or absent on the job market in the Netherlands.
Remuneration and provisions to extraterritorial employees to compensate or prevent expenses outside the country of origin
shall, with respect to employees arriving at the joint request of the employee and the employer, in any case be considered
remuneration for extraterritorial expenses up to (proof scheme):
A. 30% of the basis, this being the sum of the wage (including bonuses etc.) received associated with the stay outside the
country of origin to the extent the entered or transferred employee has no right in this regard to prevent double taxation,
and remuneration for extraterritorial expenses;
B. the amount of the tuition fees. Tuition fees are payments for children of the extraterritorial employee to participate in
primary or secondary education at international schools and international departments of non international schools,
up to the amounts charged by the school according to its rates for education, with the exception of costs and
accommodation expenses but including travelling expenses.
It’s not allowed to split the gross salary mentioned in the employment agreement in a taxable part of 70% and a
non-taxable part of 30%.
Instead the gross salary must be reduced to 70% on top of which a tax free remuneration of 30% can be paid.
Consequences are that all the rights based on the gross salary will be reduced too like pension and social security.
An appendix to the employment agreement must be made.
For the evaluation of whether an entered employee possesses specific expertise that is scarce or absent on the
job market in the Netherlands, a minimum salary requirement was introduced on 01-01-2012.
This salary requirement replaced the obligation to proof the level of education and relevant work experience.
This information may still be relevant though if scarcity has to be proven.
The minimum gross salary needed for the 30% ruling exclusive the 30% ruling:
2016: € 36.889
2015: € 36.705
2014: € 36.378
For the employee under 30 years who has a master degree the minimum annual salary required is:
2016: € 28.041
2015: € 27.901
2014: € 27.653
For scientists there is no longer a minimum annual salary.
Foreign students who have completed an HBO/WO (higher education) course can file an application with the IND to remain in the Netherlands
for a year to look for a job.
This is known as a zoekjaar/search year and during this period they are not eligible for social benefits and must support themselves financially.
During this year they do not need a separate work permit in order to work.
If they find an appropriate job (minimum salary € € 28.041 fr new graduates) they can apply for residence under the highly skilled migrant scheme.
The amounts of the minimum salary will change yearly.
You can find the actuel numbers here.
Incoming employees must have lived more than 150 km from Dutch border before the work in the Netherlands commences.
Distance is measured in a straight line from the city you lived in to the closest Dutch border.
The tax authorities will look at the city you lived in during the 2 years before you came to the Netherlands to prevent that employees move to another city further than 150 km away just before coming to the Netherlands.
For entered employees the term of the proof scheme is a maximum of 8 years, starting on the first day of employment by the employer (for employees who were granted the 30% ruling before 01-01-2012 the term is maximum 10 years).
Change of employer
Should an entered employee have another employer during the term, the proof scheme shall remain in force at the joint request of the employee and the new employer for the remainder of the term, providing the period between the end of employment by the former employer and the start of employment by the new employer is no longer than three months.
For such a request the new employers shall demonstrate anew that the employee is to be designated as an entered employee.
Monitoring of the ruling
Should the entered employee no longer satisfy the requirements, the term shall be reduced to the time this situation arises.
Before 1-1-2012 the first 5 years of the term were guaranteed (of course for as long as the employment contract was in force),
this is no longer the case.
Transitional regulation however guarantees that if the ruling is granted between 01-01-2007 and 31-12-2011
the guaranteed period of 5 years remains applicable.
Prior stay in the Netherlands
Should an entered employee have worked or stayed in the Netherlands prior to the start of employment,
the term shall be reduced by the periods of prior employment and prior stay.
Periods of prior employment and prior stay that terminated more than 25 years before the term of employment shall not
be taken into account.
The entered employee will not have worked in the Netherlands if he worked in the country for a maximum of twenty days in
every calendar year for the period of 25 years.
The entered employee will not have stayed in the Netherlands if in every calendar year of the period of 25 years he did
not stay in the Netherlands for a total of six weeks for holiday, family visit or other personal circumstances,
with a one-off period not being taken into account of at most three consecutive months in the Netherlands for holiday,
family visit or other personal circumstances.
For applications which were filed before January 1, 2010 the maximum period which will be checked by the tax authorities
is only 10 years instead of 25 years.
Should the request be made within four months after the start of employment as an extraterritorial employee by the employer,
the decision shall be retroactive to the start of employment as extraterritorial employee. If the request is made later,
the decision shall apply starting the first day of the month following the month in which the request is made.
A request for application or continued application of the proof scheme with respect to an entered employee shall be made
to the tax inspector in Heerlen.
He shall decide on the request for a decision that is eligible for objection.
In the event of reduction of term pursuant to this section, a period for which the term is reduced shall be rounded
up to full calendar months.
An expat who qualifies as a resident taxpayer of The Netherlands, can optain to be taxed as a deemed non-resident taxpayer.
As a deemed non-resident taxpayer, the expat need not report any investment income to the Dutch Revenue
(except for Dutch source income, such as Dutch real estate).
The choice will be made in the application form but can be changed every year.
The expat can still deduct certain personal expenses (alimony payments, medical expenses).