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.

Would you like to know whether the 30% ruling is applicable for you or your employees? Use the contact form at the bottom of this page or read our eMagazine!

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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.

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

Tax free allowance

Which extraterritorial costs can be covered with this ruling?

» 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

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 or 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 5 years (60 months). This period will 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%. In 2021 an employee’s taxable yearly income must be more than EUR 38,961. For an employee that has a qualifying master’s degree and is younger than 30 years old, this is EUR 29,616.

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.

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 calendar year (tax year).
The 30% ruling is applicable for a full year.
The annual gross salary of the employee amounts to € 45,000.
Based on an addendum the agreed gross salary is reduced for employment law purposes because of the 30% allowance.
The salary norm is € 38,961 (2021).
Tax credits have not been taken into account.

	Without 30% ruling (EUR)	With 30% ruling (EUR)
Gross salary	45,000	45,000
30% allowance	0 _____	6,038 _____
Taxable income	45,000	38,962
Subtract: tax / social security	16,695	14,455
Add: 30% allowance	0 _____	6,038 _____
Net salary	28,305	30,545

In this example, the 30% allowance amounts to € 6,038. 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 higher than € 38,961.

This example shows that the benefit of the 30% ruling is € 2,240 (€ 30,545- € 28,305).

EXAMPLE 2

This second example also 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 calendar year (tax year).
The 30% ruling is applicable for a full year.
The annual gross salary of the employee amounts to € 60,000.
Based on an addendum the agreed gross salary is reduced for employment law purposes because of the 30% allowance.
The salary norm is € 38,961 (2021).
Tax credits have not been taken into account.

	Without 30% ruling (EUR)	With 30% ruling (EUR)
Gross salary	60,000	60,000
30% allowance	0 _____	18,000 _____
Taxable income	60,000	42,000
Subtract: tax / social security	22,260	15,582
Add: 30% allowance	0 _____	18,000 _____
Net salary	37,740	44,418

In this example, the 30% allowance amounts to € 18,000. This is 30% of the salary. This example shows that the benefit of the 30% ruling is € 6,678 (€ 44,418 – € 37,740).

MORE INFORMATION?

Would you like to know more about the 30% ruling? Fill out the below contact form to get in contact with our 30% ruling team.

Corine Freke30% adviser

Ellen Smit30% adviser