What is the 30% Ruling?
The 30% (formerly 35%) reimbursement ruling is a tax advantage for expat employees in the Netherlands.
In a nutshell, the Dutch government offers extra incentives to attract foreign specialists with specific skills or expertise that are scarce or not available in the local marketplace.
In general, specialist expats who meet certain criteria are entitled to many fiscal and non-fiscal advantages.
Substantial tax relief (30% tax free wage)
The most significant benefit is that the taxable amount of a gross Dutch salary is reduced from 100% to 70%, so 30% of the wage is tax free (exempt from payroll tax and personal income tax).
The Tax and Customs Administration offers a maximum tax rate of 36,4% (30%*100/70 of the gross salary) so that expats can cover their extraterritorial expenses.
These expenses are costs that most expatriates have to cover when working away from their homeland and may include:
› Costs of water, gas, electricity etc (if prices in the Netherlands are higher than in the country of origin)
› Application costs for residence permit, visa, driving license etc.
› Hotel expenses (if expats still live in their homeland)
Other tax reliefs
› Additional tax-free reimbursement for certain expenses (i.e. fees for international schools for expatriates' children).
› Possible exemption from the Dutch net-wealth taxation (i.e. partial non-resident taxpayers). Investments in real estate are not included though.
› Tax-free income from interest in any non-Dutch entity.
› All other income tax deductions still remain applicable.
› Entrepreneurial expats can also use this ruling if employed by their corporation (Ltd or Dutch BV). Besides, they can take advantage of this compensation to attract more specialists from abroad.