If you are moving to the Netherlands for work, you might be able to apply for the 30% ruling tax advantage.
Don’t miss out on this tax exemption opportunity, if you meet the criteria this will save you a lot of money!
What is the 30% ruling?
The 30% ruling is a tax benefit for expats who move to the Netherlands for work. It is meant to attract highly-skilled workers from abroad.
This tax advantage was introduced as a reimbursement for the costs incurred when relocating to the Netherlands (travel costs, visas, housing…). The main idea behind this initiative is to attract people with skills or an expertise unavailable in the Netherlands.
The 30% ruling falls under the responsibility of the Dutch tax office (Belastingdienst).
What is the benefit of the 30% ruling in the Netherlands?
The 30% ruling enables your employer to pay you 30% of your salary tax-free. It’s a tax exemption.
What does it mean? Well, if you have the 30% ruling, you will only pay tax over 70% of your Dutch salary (gross). Your employer will pay you 30% of your salary as a tax-free allowance.
You can simulate the impact the 30% will have on your next income with this Dutch Income Tax Calculator tool.
If you moved to the Netherlands for a new job that pays €60,000 a year (€5,000 a month) and have the 30% ruling, you will:
– Pay taxes on 70% of your salary. You will be taxed on €42,000 a year (€3,500 a month). This will be your taxable income.
– Receive a tax-free allowance from your employer of €12,000 per year (€1,500 a month).
– It means that every month, instead of receiving €3,365 (income 100% taxed) net you will receive €4,101 (30% ruling).
How long does the 30% ruling last?
It lasts 5 years from the moment you start benefiting from it.
The 30% ruling used to last 8 years. Since January 1st 2019, it has been shortened to 5 years (which still isn’t bad).
The requirements for the 30% ruling
Not every foreigner coming to the Netherlands for work can apply to the 30% ruling. You need to meet certain requirements:
- You were recruited outside of the Netherlands (or are sent from another country to the Netherlands);
- You work for an employer registered with the Dutch tax office and pays payroll tax;
- Your employer and you agree that the 30% ruling is applicable (in writing);
- In the 24 months before your first working day in the Netherlands, you lived outside of the Netherlands (at a distance of more than 150 kilometres from the Dutch border) for more than 16 months;
- Your salary meets the minimum requirements (yearly taxable income of €38,347 in 2020);
- You have an expertise that is not or rarely available in the Netherlands.
Keep in mind that the employer is not obliged to help you get the 30% ruling. Discuss the 30% ruling with any potential employers before you take the job.
The salary requirement for the 30% ruling
You can get the 30% ruling if you have a specific expertise and are considered to possess it if your taxable salary (not including the tax-free allowance) is at least €38,347 in 2020.
If your yearly income is €60,000 and you have the 30% ruling, then your taxable income is 0.3*60,000= €42,000. This is above the minimum of €38,347.
If your yearly income is €40,000 and you have the 30% ruling, then your taxable income is 0.3*40,000= €28,000. This is below the minimum of €38,347. It means you can still benefit from the 30% ruling, but not to the full amount. Your yearly allowance would only be €40,000 – €38,347= €1,653.
You would still benefit from the 30% ruling but not to the full amount.
If you are under 30 and have a Master’s degree, the salary requirement is lower: €29,149 in 2020. Be aware that you might need to get your diploma checked by a third party to certify it is the equivalent of a Dutch Master’s degree.
If you are conducting scientific research at a research institution, you can get the 30% ruling without any salary restrictions.
How to apply to the 30% ruling?
You need permission to apply for the 30% ruling. You and your employer should submit an application that will be reviewed by the Dutch Tax Authority. You will need to provide some information:
- passport or valid photo ID;
- employment contract or letter from your employer;
- your BSN number;
- Dutch residence and work permits (if applicable);
- Dutch address;
- proof of residence in another country before being hired;
- company details including company tax number;
- written agreement stating that both parties have consented to the application for the ruling.
Reviewing the application might take some time (2-4 months), but it is retroactive. It means that if you apply for the 30% ruling in January 2020 and only get it in April 2020, then you will receive some money back from the extra taxes you paid in the months of January, February and March 2020.
You can read more about the 30% ruling on the Ducth Tax authority (Belastingdienst) website.
Do I still keep my 30% ruling if I change jobs?
Yes. However, if you change jobs, you will have to reapply for the 30% ruling. It’s only if you still meet the conditions and if your new employment contract is signed within three months after termination of the previous that you can still benefit from it.