Get your 30% ruling now and receive a tax discount!
Dutch people love discounts, but the Dutch tax administration (Belastingdienst) do not give discounts to just anyone. If you are an expat, the Belastingdienst may give you a discount on your Dutch income tax bill. The discount is called the 30% ruling. It allows your employer to pay 30% of your salary free of tax. This part of your salary is treated as a tax-free allowance for extraterritorial expenses. This is a great advantage of working as an expat in the Netherlands.
Below you find information in English about the 30% ruling. Click here if you want to apply for the 30% ruling. For information in Dutch, please visit the Web site of our colleagues of “dtai belastingen & administraties” who like ourselves can also help you request for the 30% tax ruling (or “30%-regeling” in Dutch).
Main benefit of the 30% ruling
What is the main advantage of the Dutch 30% tax ruling and how do you calculate it? Let’s say for example that the gross salary your new Dutch employer wants to pay you is € 90,000. The maximum tax-free allowance for extraterritorial expenses will then be 30% of € 90,000 = € 27,000. You will only pay tax on the other € 63,000. As the marginal tax rate is 52%, in this example the annual advantage of the 30% ruling is more than € 14,000 (52% x € 27,000)!
General conditions of the 30% ruling
Incoming employee coming from at least 150 kilometer from Dutch border
The most important condition of getting the 30% ruling is that you must be hired from abroad. The distance between your residence before you were hired and the Dutch border must be more than 150 kilometers. This should be so for 16 of the last 24 months before your first workday. Residents of almost the entire United Kingdom meet this condition, except people living in the far South East of England (to the east of Canterbury, e.g. Dover). So people coming from London are able to get the 30% ruling if they come to work in Holland. Employees coming from Belgium, Luxembourg, a large part of Germany and the very North of France are not eligible for the Netherlands 30% tax ruling. The 150 kilometer rule does not apply for PhD’s who start working within one year of finishing. To qualify, the PhD must meet the 150 kilometer condition before the start of their PhD.
In the past there has been a lot of discussion about if the 150 kilometer requirement of the 30% ruling is in accordance with EU law. The EU court of justice have found it can be in accordance with EU law and have asked the Dutch supreme court to investigate further. It is expected that the Dutch Supreme Court will rule that the 150 kilometer requirement is in accordance with EU law.
Read more about the 150 kilometer condition of the 30% tax ruling here.
Specific expertise and minimum salary requirement
The second most important condition is that you should have a specific expertise that is scarce on the Dutch labour market. The salary your employer is willing to pay you shows if you have a specific expertise. After applying the 30% ruling, your taxable salary on an annual basis should at least be € 36,889 (year 2016). A common mistake is to think that this means that your minimum annual gross salary should be € 52,699 to get the 30% ruling. People think so, because 100/70 x € 36,889 = € 52,699 and 70% of € 52,699 is € 36,889. In fact, the minimum gross salary is € 36,889. This is because your employer can also pay you € 0 as a tax-free allowance under the 30% ruling. This way, future pay rises can be paid to you tax free under the 30% ruling, until your gross salary is € 52,699.
For people under 30 years of age who have a degree that is comparable to the Dutch University master’s degree, it is easier to get the 30% ruling. For them a lower minimum salary applies of € 28,041 in 2016. If you do scientific research at a research institute, no minimum salary at all applies for getting the 30% ruling.
Find more information about the minimum salary requirement of the Netherlands 30% tax ruling here. You can also use our 30% ruling calculator to see if you meet the minimum salary requirement.
Validity of the 30% ruling
The 30% ruling is valid for 5 years. Time spent in the Netherlands in the last 25 years before starting your employment may be deducted from the validity period. This depends on the nature of your earlier presence here. Working periods in the Netherlands for 20 working days or less will not be deducted. Also if you were in the Holland for private reasons for at maximum 6 weeks per year the validity period will not be shortened. A period of at maximum 3 months for private reasons is also disregarded.
Changing employment and the 30% ruling
If you change employment, you and your new employer have to transfer your 30% ruling. Normally this is a straightforward procedure that does not lead to any problems. If your old employer did not apply for the 30% ruling even if you qualified for the entire period since just before you were hired, it is possible for you and your new employer to still request for the 30% ruling. The validity period will be shortened however with the period of your prior stay in Holland.
Start your own business with the 30% ruling in the Netherlands
It is possible to start your own business in the Netherlands and still benefit from the 30% tax ruling. If you incorporate your own BV or Ltd. and do business with it, you become an employee of that company and the BV of Ltd. will have to pay you a salary. This salary can be part tax free because of the 30% ruling. It is still wise however to calculate whether or not it is better for you to start your business as a self-employed person (ZZP), because a ZZP also receives tax advantages in Holland.
Other consequences of the 30% ruling
The 30% ruling allows the expat to opt for the partial non-resident status. A partial non-resident is exempt from Dutch income tax on income from savings and investments, unless this comes from Dutch real estate. A partial non-resident is also exempt from tax on income from foreign substantial shareholdings.
American residents or green card holders holding the 30% ruling and opting for the partial non-resident status do not pay Dutch income tax on non-Dutch workdays. They will have to pay tax on the income earned on the non-Dutch workdays in the United States.
If you immigrate to the Netherlands, your driver’s license will not be valid after 185 days. If you are from the European Union or the European Economic Area or a country that is listed by the Dutch government, you can easily exchange your foreign driver’s license to a Dutch driver’s license. If you are not from any of these countries, you will have to take a driving test in the Netherlands, unless you or one of your family members holds the 30% ruling. If you or one of your family members holds the 30% ruling, you can also exchange your foreign driver’s license to a Dutch driver’s license.
Pension, unemployment benefits and health care benefits
In the past you normally did not build up pension rights on the tax free part of your salary. Nowadays in principle you do build up pension rights on the tax free part of your salary. The employer does not pay unemployment insurance and health insurance premiums on the part of the salary of the employee that is tax free because of the 30% tax ruling. This advantage for the employer has its downside for the employee. The employee’s right to unemployment or health care benefits is reduced because of the 30% tax ruling.
International school fees and extraterritorial expenses
Besides the 30% tax free part of the salary, the employer can still also reimburse the international school fees the employee incurs free of tax. Employers can also reimburse certain extraterritorial expenses of expatriate employees free of tax if they do not hold the 30% ruling. The benefit of the 30% tax ruling however is that the employer does not have to show that the employer actually incurred these expenses.
30% ruling calculator
If you want to calculate what the annual advantage is of holding the 30% ruling, you can use our 30% ruling calculator. It also shows if you meet the minimum salary requirement.
Request for the 30% ruling
We can apply for the 30% ruling for you on a no cure, no pay basis. The application is made on behalf of both the expat and the employer together. We need a signed approval from you and your employer to make the request. A special addendum to the employment agreement should be made for the 30% ruling. We provide this and can also help your employer apply the 30% ruling in the payroll.
Please leave a message with your contact details on this Web site or on email@example.com, or just call directly on +31(0)23-303 7444.