Netherlands 30% tax ruling: Other consequences
Other consequences of the 30% ruling
With the Netherlands 30% tax ruling you pay a lot less income tax. Getting the Netherlands 30% tax ruling has even more benefits. It however also has some slight disadvantages. Below you find everything you need to know about this.
Tax exemption from Dutch income tax on savings and investment income
As a holder of the 30% ruling, you can choose to be treated as a foreign tax payer as it comes to being taxed on your savings and investments (box 3). This is called opting for the partial non-resident status. This way, you are exempt from Dutch income tax on your bank accounts, shares and other investments. The only exception is Dutch real estate. If you choose to be treated as a foreign tax payer, you are also not taxed in the Netherlands on income that comes from a substantial shareholding in a foreign company (box 2). A substantial shareholding is a shareholding of more than 5% of a class of shares (e.g. “class A”) in a company. You are however taxed for income from substantial shareholdings in Dutch companies.
If you have a fiscal partner, also your partner can benefit from this exemption. This is because your partner can allocate his or her savings and investments to you.
American residents or green card holders
If Americans or green card holders choose to be treated as a foreign tax payer for box 2 and box 3, they do not pay Dutch income tax on non-Dutch workdays. By tax treaty, the right to tax these working days are allocated to the United States. These persons will have to pay tax on the income earned on the non-Dutch workdays in the United States. This will probably be an advantage, depending on the actual tax payable in the United States on the income from these days.
For the tax treaty between the Netherlands and the United States, Americans or green card holders that opt for the partial non-resident status are tax residents of the United States. This way, they are taxed on their worldwide income there, with the possibility to claim for relief to avoid double taxation.
For other tax treaties of the Netherlands, these persons are considered to be tax residents of the Netherlands. Only, if a proof of residence is required, the Dutch tax administration (Belastingdienst) will state on this proof of residence that this person is only taxed in the Netherlands on his labour income. The only disadvantage may be that because you are not taxed on your savings and investments and foreign substantial shareholdings, you can also not claim any tax treaty benefits to avoid any double taxation in the foreign country.
Pension, unemployment benefits and health care benefits
Prior to 2015 in most cases holders of the Netherlands 30% tax ruling did not build up pension rights on the tax free allowance. This was because this was not part of the taxable salary and thus not part of the pension base. This was only different if the employer had a pick-and-mix benefit system (in Dutch: “cafeteriaregeling”) so that employees could choose between taxable salary and some tax free allowances. After 1 January 2015, in principle you do build up pension rights on the tax free part of your salary. This is because due to a system change.
A disadvantage for employees is that the employee’s right to unemployment or health care benefits is reduced because of the 30% tax ruling. So if an employee becomes unemployed or gets ill, his or her right to unemployment or health care benefits will lead to lower benefits. This is because the employer did not pay unemployment insurance and health insurance premiums on the tax free allowance. Not having to pay these premiums is a small advantage for the employer of the 30% ruling.