What is the 30% Ruling?
Updated: Jul 23, 2018
Popularly known as the 30% ruling among the expats is a benefit that highly skilled immigrants are entitled to (only when certain conditions are met) when they move to Netherlands to work or research. This is relevant with your employment in a certain role and is a tax advantage offered by the government of the Nederland’s to make life a bit easier and attractive for the expats arriving in Netherlands.
A few times we have encountered a situation where neither the company nor the employee (immigrant) was aware about this benefit. So here is what we can tell you. Keep in mind if you meet necessary conditions you can receive a tax free allowance up to 30 % of your gross salary ( as per Dutch tax payroll)
Why is this allowance?
This tax-free allowance is to facilitate the expats who incur added expenses as a foreign employee living away from their homeland. They suddenly undergo huge overhead costs to re-establish in a new country and this ruling helps them to bridge this gap. Hence, the belastingdienst (Dutch tax office) extends this support. This is also called as special expense reimbursement for extraterritorial costs. ( new blog coming up on this soon)
Who can process it for you?
The companies who are recognised sponsors by IND and are part of the highly skilled migrant plan (from IND) can get this arranged for you. You should surely look in to check the public list of the Public register of recognised sponsors. There can be following ways in which your employer can be a sponsor Public Register Au Pair and Exchange, Public Register Educational institutions, Public Register Regular Labour and Highly Skilled Migrants or Public Register Researcher Directive (EU) 2016/801
What are the conditions?
You can be entitled to 30% tax benefit only when you meet at least all the following conditions: -
Expat recruited from abroad for a position in the Netherlands
You should have an employment situation employee of a legal entity registered in Netherlands (self-employed cannot claim)
Your employer needs to agree in writing for 30 % ruling this can be a clause of your employment contract or can be added as an appendix or supplement.
You must have been living abroad and not in Netherlands before you get this employment.
Must have not lived in 150 kms of the Dutch borders for a continues period of 8 months within a time frame of 24 months before the employment. read more about 150 kms Dutch border conditions
The employee must have specific experience or expertise scarcely available in the Netherlands (depends on combination of age, culture, education, history and many other aspects that make you unique)
Gross salary must meet the minimum adjusted requirements based on your age at the time of employment. (which is usually higher than regular Dutch salary)
§ Your salary is at least € 37,296 in 2018 (excluding the free allowance).
§ You are younger than 30 and have a Dutch master's degree in scientific education or an equivalent degree in a country other than the Netherlands. And your salary is at least € 28,350 in 2018 (excluding the free allowance).
§ You conduct scientific research at a specific research institution. In that case, you can always use the 30% ruling.
How long is it valid?
In 2017 there was a big discussion to reduce the number of years to 5 years but it was decided to stick to 8 years. Hence once there is a clear decision that 30 % ruling is applicable to your situation you will receive this benefit for first 8 years of your working life here. If you stop working before 8 years it automatically seizes to apply.
The financial Consequences?
The salary payed to a foreign national is first reduced by 30 % which in return is paid back as an allowance to the employee. This is payed back as reimbursement of 30 % as tax return.
This reduction in salary and then allowance in 30 % reimbursement to reduce the trouble of the employer and encourage them to do so. (remember your employer is not obliged to do so)
Advantages and Other benefits?
Are you eligible for 30 % ruling we have more good news for you? –
Driving Licence: If you 30% ruling is applicable to you can exchange your non- Dutch driving licence to a Dutch one without taking a test. Usually taking the test is a very expensive process. Moreover, acquiring the Dutch driving license through an examination process is super difficult.
Partial Non Residence Status: - You automatically acquire this status in Netherlands which means more tax advantages. This helps you and saves you from paying taxes for some assets in Netherlands enlisted under Box 1,2 and 3 which otherwise is liability for you to pay as a high-income resident of Netherlands. You should definitely read more about this on https://www.belastingdienst.nl/30%ruling
Not Yet Applied? It’s not too late
Many times, we come across expats who have missed this but it is not too late. You can in fact still apply for it if you have missed it at the first place even after few years of your arrival.
official form to request 30% ruling 2018
Aditi Gupta
India