The 30% Tax Ruling
The 30% ruling is quite beneficial since 30 percent of your salary is paid out on a tax free basis. From a tax perspective, the salary agreed upon between the employee and employer will be reduced by 30%. In return, the employee will receive a 30% allowance as reimbursement for expenses. The 30 percent ruling is meant as a compensation for the extraterritorial costs, basically the extra costs an employee coming from abroad has due to his relocation.
Applying for the 30 percent ruling
A well-structured and clear application is essential to obtain the benefits of the 30% ruling. Our specialized tax consultants know how to make sure your case is well presented to the Dutch Tax Authorities. This will increase the chances that your application is accepted. In case your first application was denied, we can help and restructure, in order to increase the chances of acceptance of the second opinion.
Once the 30% ruling is granted, the ruling will have to be processed and applied to both Wages Tax return and Income Tax return. The Dutch government has announced a reduction to a maximum of five years from Januari 1st 2019. Basically, the 30% ruling and therefor it’s benefits, will now end after 5 years unless this period is reached in 2019 or 2020.
30% ruling requirements
In order to obtain the benefits of the 30% ruling in the Netherlands, you are required to show a particular scarce skill or expertise and have to be recruited by a Dutch employer from abroad. Here you find the list of specific requirements:
- The specific expertise requirement is mainly based on a minimum salary requirement of € 37.743 (in 2019) taxable salary plus the 30 percent allowance, which means about € 53.280 gross salary (including the 30 percent tax free part);
- Prior to your employment in the Netherlands you need to have lived further than 150 kilometers from the Dutch border during the last 16 months out of 24 months;
- Specific regulations apply to graduates and research scientists. If PhD graduates are offered a job in the Netherlands after they graduate, they are not obligated to have lived abroad before accepting the job. The minimum taxable salary needs to be € 28.690 (in 2019). For research scientists there is no minimum salary;
- Periods in which you have lived and/or worked in the Netherlands will be deducted from the 30 ruling period. (Dutch people are obliged to have lived at least 25 years abroad before being recruited to be counted as an expat);
- If you change jobs you need to be unemployed for a maximum period of 3 months otherwise you will lose the 30 percent ruling.
30 ruling Netherlands: opt for partial non-domestic taxation
In case the 30% ruling has been granted, you can opt for partial non-domestic taxation which releases you from the obligation to pay taxes on your worldwide wealth in box 3. On top of this you will be exempt from tax on income from savings and investments, as well as taxation on dividends from substantial shareholdings, with some exceptions. Along with some other practical advantages, such as an easier procedure for acquiring a Dutch driving license, this makes the 30 ruling a great arrangement for expatriates.
Contact us now
If you would like to know what the possibilities are for you, or seek advice how to apply the 30% ruling, please do not hesitate to contact us.