Overview 30% ruling
Expats & Tax:
The 30% ruling!
Are you an expat living and working in the Netherlands? Then you might have heard of the well-known 30% ruling in the Dutch tax system! In this article we will provide you an overview of the 30% ruling, so you will be able to verify if you can benefit from this tax advantage.
Introduction and background 30% ruling
The 30% ruling, also referred to as the 30% facility is a tax reduction for foreign workers who have been recruited or transferred from abroad to fulfil specific expertise which is scarce or unavailable in the Dutch labour market. With this ruling the Dutch government is trying to attract highly skilled and educated employees towards the Netherlands. The tax reduction is meant to be a compensation for extraterritorial expenses.
Requirements for the Dutch 30% ruling
To be entitled for the 30% ruling all of the following conditions have to be met:
• You have to work for an employer liable to withhold Dutch payroll tax on your salary;
• You must agree with your employer in writing that the 30% ruling is applicable;
• You have to be transferred from abroad to a Dutch employer, or you have to be recruited from abroad by a Dutch employer;
• You must not have resided within 150 kilometers from the Dutch border for at least 18 of the 24 months before the time of hiring;
• Your taxable salary must be at least € 35,770 per year (excluding the 30% ruling);
• You must have specific expertise which is scarce or unavailable in the Netherlands.
Specific expertise requirements
For the requirement of specific expertise which is scarce or absent on the Dutch labor market, a minimum salary requirement was introduced in 2012. This minimum salary requirement (of € 35,770 per year in 2013) replaced the obligation to provide proof of the level of education and relevant work experience. This information may still be required however if scarcity of expertise has to be proven for a specific industry in which almost every employee will fulfill the minimum salary requirements (e.g. professional football players).
The minimum salary requirement of € 35,000 per year is excluding the 30% allowance. This means that the required gross salary will be € 50,000. However, scientists and researchers working at universities and knowledge organizations will be exempted from the salary requirement.
For young Masters and PhD students below the age of 30 the salary requirement is lowered to € 27,190 (with a required gross salary including 30% allowance of around € 38,000).
Start & Term of the 30% facility
If you apply for the 30% ruling within 4 months of commencing employment the ruling will become applicable from the start of your employment. The standard term for the tax reduction is currently a maximum of eight years from the beginning of your employment. If you change employers you can request the 30% ruling again (the maximum of eight years will not be extended).
If you would like to change employment, be aware that if you don’t find a new job within 3 months your 30% ruling eligibility will end.
Tax benefits through partial non-residency status
Besides the tax reduction on your salary another tax benefit could be achieved.
If you opt for the so called partial non-residency status you will not have to pay tax on income from substantial interest in box 2, or savings and shares in box 3.
Would you like to have more information regarding the 30% ruling?
If you still have any questions regarding the 30% ruling or other tax matters, please do not hesitate to contact our office. We can help you with (expat) tax advice and the filing of your tax returns.
Our team can provide you with a range of services surrounding the 30% ruling