How to get the 30% ruling for expats
Nov 1, 2020
Ahhh, the 30 % ruling… We’ve all heard about that one! It is a large tax discount for lucky expats in the Netherlands. Receivers of it are viewed with understandable envy by those who didn’t: for 5 years you receive 30% of your salary tax-free. This can easily amount to € 15,000 extra in your pocket at the end of each year. In this article we explain how this works.
What are the rules for getting the 30 % ruling?
The 30 % ruling is intended as compensation for the expensive life and lifestyle of expat employees in the Netherlands, so called “extraterritorial expenses”. Along the way, it provides a nice tax incentive to contribute to the Dutch economy (some say the Dutch government prioritized it the other way around). The fact of the matter remains that the ruling isn’t handed to you for gratis. You’re going to have to work for it, and quite possibly hire an expert to get the ruling for you. These are the main rules:
You have been recruited from abroad by a Dutch company to come and work in the Netherlands. This means that, prior to being recruited, you must have lived for at least 16 months at a distance of at least 150 kilometers from the Dutch border.
You must have in-demand skills which are scarcely available on the Dutch market. This is chiefly determined by your salary. Your annual salary before taxes must be more than € 38,347 (2020). If you hold a master degree and are younger than 30 years, your annual salary before taxes must be more than € 29,149 (2020). The wage from current employment includes not only the fixed salary elements like the gross salary and the holiday allowance, but it also includes incidental and flexible reimbursements such as bonuses. These norms are indexed annually and will increase in 2021 and onwards. Part timers have to comply with the same norm, so there’s no proportionality to the FTE. This threshold is not required from employees who work in certain areas of teaching and research at educational institutes, including universities, designated for this purpose.
Your employer must be on board with the ruling. It is a collective request. Your employment contract should also specifically refer to the 30%-ruling. Furthermore, your salary package should be written in such a manner that the 30% tax-free allowance will be paid in addition to the wage from current employment. The 30% ruling is not a tax refund: it needs to be applied to your salary by your employer. This is negotiable between employer and employee.
Your request must be made within 4 months after the start of the employment in the Netherlands. If this requirement is not met, the 30 % ruling can be obtained but it will only apply to salary received starting the month after your request is received.
Are there any situations or exceptions I need to be aware of?
There are always some additional caveats or lucky breaks. These are the most important :
Your nationality has no bearing on receiving the 30% ruling. You can actually be a Dutch person having lived abroad for a long time, and meet all the requirements. Your nationality does come into play for getting a residence and working permit, but that’s not covered here.
You can start your own business in the Netherlands and use the 30% ruling. After all: when you start your own company, you go on its payroll too! If you plan to work as a freelancer or business owner using a Dutch BV, you can get the 30 % ruling if you meet all the requirements. Be sure to plan your move well ahead, which includes setting up the company before you move to the Netherlands, and putting yourself on its payroll correctly.
There are exceptions to the requirement of “recruitment from abroad”. In recent cases our associates managed to secure 30% rulings for expats who studied or interned in the Netherlands before finding a job here. Having studied in the Netherlands does not disqualify you for the 30% ruling as such.
If you are luckily employed under the 30% ruling, you may switch to another employer without consequence. You will benefit from the 30% ruling for the remainder of the time left under the ruling, as long as the period between both employers does not exceed 3 months. How this period is to be measured, is food for heated debate. If you are in such a situation, let us know.
If you have any questions about the 30% ruling, don’t hesitate to reach out.
Do you have any questions after reading this? Don’t hesitate to reach out.
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