30%-ruling

The 30%-ruling is a Dutch tax facility aiming at attracting foreign employees with specific skills or expertise to work in the Netherlands. On this page you will find a brief overview of the 30%-ruling including the conditions, the application procedure and two fictional examples.

General

The 30%-ruling provides a tax free allowance (30%-allowance) which is deemed to cover all so-called extraterritorial costs. Extraterritorial costs are defined as the extra costs for staying outside of the country of origin. Such costs relate for example to:

  • traveling costs of home leave;
  • extra costs of living;
  • double housing;
  • finding suitable housing and schools of children;
  • residence permit applications and changing of official documents (work permits excluded);
  • language courses.

Application of the 30%-ruling gives rise to a substantial increase in net salary for the employee and substantial reduction of employer’s costs.

Conditions

In order to be eligible for the 30%-ruling the employee should:

  • Be recruited or assigned from abroad. This criterion implies that, to be on the safe side, the Dutch employment/assignment agreement has to be signed before arrival in the Netherlands.
  • Have a Dutch withholding agent for Dutch wage tax purposes. A foreign employer may voluntarily register as withholding agent for Dutch wage tax purposes, in order to meet this criterion.
  • Have specific skills or expertise that is not or only scarcely available on the Dutch labour market. An employee is deemed to have specific skills or expertise if the annual taxable salary (excluding the tax-free 30%-allowance) meets the salary norm. Apart from that, the skills or expertise should be not or only scarcely available on the Dutch labour market.
  • Have lived more than 16 months of the 24 months preceding the Dutch employment outside a radius of 150 kilometres from the Dutch border.

Duration

The 30%-ruling can be granted for a maximum of 8 years (96 months). This period can be reduced with earlier periods of stay or employment in the Netherlands.

Salary norm

The salary norm must continuously be met. This may imply that the reduction of the agreed salary and the tax-free allowance should be less than 30%.

Application procedure

For the application of the 30%-ruling a joint request must be filed by the employer and the employee.

If the request is filed within four months as from the first day of employment, the 30%-ruling retroactively applies as from that first day of employment. If the request is not filed within four months, the 30%-ruling only applies as from the first day of the month following the month during which the request was filed.

If the employee meets all requirements, the Tax Authorities will issue a 30%-notification. Otherwise, they will issue a rejection. Such a rejection is eligible for appeal and can ultimately be brought before the Dutch tax court.

Agreement with the Tax Authorities

As from January 1, 2014 LIMES international judges the application of the 30%-ruling based on a special agreement with the Tax Authorities. Whether an employee will be eligible for the 30%-ruling can now be judged by LIMES within one day. After our positive judgement the Dutch tax office will issue the official 30%-ruling notification.

Example 1

This example is a simplified illustration of how the 30%-ruling works in practice.

Assumptions

  • The employee is 30 years or older.
  • The employee works in the Netherlands for a full calender year (tax year).
  • The 30%-ruling is appicable for a full year.
  • The annual gross salary of the employee amounts to € 40.000.
  • Based on an addendum the agreed gross salary is reduced for empoyment-law purposes because of the 30%-allowance.
  • The salary norm is € 37.000 (2017).
  • Tax credits have not been taken into account.
Without 30%-ruling (EUR) With 30%-ruling (EUR)
Gross salary 40.000 40.000
30% allowance          0 –   2.999 –
Taxable income  40.000 37.001
Less: tax/social security  15.453 14.242
Add: 30%-allowance           0   2.999
Net salary  24.547 25.758

In this example, the 30%-allowance amounts to EUR 2.999. This is less than 30% of the salary. If the 30%-allowance would be higher, the salary (excluding the 30%-allowance) would not meet the salary norm of EUR 37.000.

This example shows that the benefit of the 30%-ruling is EUR 1.211 (EUR 25.758 – EUR 24.547).

Example 2

Also this second example demonstrates how the 30%-ruling works in practice.

Assumptions

  • The employee is 30 years or older.
  • The employee works in the Netherlands for a full calender year (tax year).
  • The 30%-ruling is appicable for a full year.
  • The annual gross salary of the employee amounts to € 52.858.
  • Based on an addendum the agreed gross salary is reduced for empoyment-law purposes because of the 30%-allowance.
  • The salary norm is € 37.000 (2017).
  • Tax credits have not been taken into account.
Without 30%-ruling (EUR) With 30%-ruling (EUR)
Gross salary 52.858 52.858
30% allowance          0 – 15.857 –
Taxable income 52.858 37.001
Less: tax/social security  20.697 14.242
Add: 30%-allowance           0 15.857
Net salary  32.161 38.616

In this example, the 30%-allowance amounts to € 15.857. This is 30% of the salary.

This example shows that the benefit of the 30%-ruling is € 6.455 (€ 38.616 – € 32.161).

 

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