The 30% ruling is a tax advantage for highly skilled migrants in the Netherlands.
What is the 30% ruling?
In a nutshell, it means that the taxable amount of a gross Dutch salary is reduced from 100% to 70%, meaning 30% of the wage is tax free.
This tax benefit, which is also known as the "30% reimbursement ruling" or "30% facility", is applicable to expat employees working in the Netherlands who meet the 30% ruling requirements.
What is the purpose of the 30% ruling?
The Dutch government introduced this tax facility to attract foreign specialists with specific expertise that is scarce or not available in the Netherlands.
This system of tax relief is intended as a reimbursement for expenses that expatriates incur when relocating to the Netherlands and working away from their homeland.
These expenses include:
› Application costs for residence permit, visa, driving license etc.
› Hotel expenses (if expats still live in their homeland).
› Traveling expenses and / or telephone calls to their country of origin.
› Dutch language courses costs for the expat and their family.
› Housing costs such as rent or bills (especially in the initial stage).
› Costs of water, gas, electricity etc (if prices in the Netherlands are higher than in the country of origin).
How the 30% ruling works
The 30% ruling is coordinated and supervised by the Belastingdienst (Dutch tax office).
It’s possible to calculate the fiscal benefit of the ruling by calculating 30% of your gross annual salary. This amount is free from payroll and income tax. The remaining gross salary (70%) will be taxed at the corresponding tax rate.
The ruling includes bonuses, holiday allowances, benefit packages and company car within gross annual salary.
Pension premiums, however, do not usually fall under salary recognised by the ruling. Neither do severance payments.
The 30% ruling equates to a maximum (effective) tax rate of roughly 36,4%, which is considerably lower than most Dutch tax brackets, including the highest bracket of 52%.
Duration of the 30% tax ruling
The 30% ruling is possible for a maximum duration of eight years but may be reduced if you have spent previous periods working in the Netherlands.
Previously, the maximum period was 10 years for expat employees who received the 30% ruling before January 1, 2012.
Other benefits from the 30% ruling
In addition to the tax break, the 30% ruling has other advantages. These include:
› Possibility to select "non-resident status" when filing your income tax to be a non-resident taxpayer in Box 2 and Box 3 on your income tax return. This means you can avoid paying tax on assets in Boxes 2 and 3 (except for real estate investments).
› Possibility to exchange your foreign driving license for a Dutch one without taking the (otherwise required) driving test. This applies for family members as well.
› Possibility to have international school fees reimbursed tax-free by your employer, if they agree to such an arrangement.
All other income tax deductions remain applicable.
Entrepreneurial expats can also use the 30% ruling if employed by their BV (limited liability company), or they can take advantage of this tax advantage to attract more specialists from abroad.
Am I eligible for the 30% ruling?
To benefit from the 30% ruling you must meet certain requirements that define you as a highly skilled migrant. An overview of these conditions is listed below:
› You must be an employee of a company in the Netherlands.
› You have specific professional expertise that is scarce or not available in the Netherlands. Highly skilled migrants are deemed to have such expertise when their income meets the salary requirements (listed below).
› You and your employer agree in writing that the 30% ruling applies to your situation.
› You have been recruited or transferred from abroad (and you have lived more than 150 km from the Dutch border for more than 24 months prior to working in the Netherlands.)
2016 salary requirements for 30% ruling
› Minimum taxable salary at 70%: 36.889 euros
(Gross salary before 30% reduction: 52.699 euros)
› For employees under 30 with a master's degree:
Minimum taxable salary at 70%: 28.041 euros
(Gross salary before 30% reduction: 40.059 euros)
2015 salary requirements for 30% ruling
› Minimum taxable salary at 70%: 36.705 euros
(Gross salary before 30% reduction: 52.436 euros)
› For employees under 30 with a master's degree:
Minimum taxable salary at 70%: 27.901 euros
(Gross salary before 30% reduction: 39.859 euros)
If you meet the above requirements then the Dutch tax office will issue you with a "valid decision" that permits you to make use of the 30% ruling.
For more details visit the 30% ruling requirements page.
Expats conducting scientific research at research institutions such as Dutch research universities and government organisations are always eligible for the 30% ruling. In this case there are no salary level requirements.
How to apply for the 30% ruling
To apply for the 30% ruling you and your employer should file an "Application for the 30% facility to be applied" (Verzoek loonheffingen 30%-regeling) with the Belastingdienst. This form is only available in Dutch.
To see what documentation is necessary visit the 30% ruling requirements page.
Can I apply late for the 30% ruling?
If you only recently discovered that you meet all the conditions it’s still possible to apply for the 30% ruling. Whether you are eligible for any back-payments depends on when you apply.
If you submit the application within four months of starting your employment then the ruling will be retroactively effective to also cover those first four months.
If you submit the application after 4 months of starting your qualifying job the ruling is effective on the first day of the month after the month in which your application was successful.
It’s still possible to apply years late, as long as you met the application conditions when you first arrived in the Netherlands.
Can I change employer?
If your employment with the 30% ruling is terminated it’s possible to apply for a continuation of the ruling if you find a new job (that meets the requirements) within three months of the termination of your previous job.
Need help applying for the 30% ruling? Check out our list of Dutch tax services & advisors in the Netherlands.