The 30% ruling
The Belastingdienst is of the opinion that employees who came to the Netherlands are confronted with extra costs, so-called extraterritorial costs. As compensation for this, the employer may give a tax-free allowance for this. The other option is that the employer provides 30% of the wage, including reimbursement, tax-free. This is also known as the 30% ruling. In this article, we further explain the 30% ruling and the benefits of it.
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What is the 30% ruling?
The 30% ruling is a tax advantage for highly skilled migrants who moved to the Netherlands for a specific employment role. If you are eligible for the 30% ruling, you don’t have to pay tax over 30% of your gross salary in the Netherlands. As of 1 January 2019, the maximum duration of the 30% ruling is five years, instead of eight years.
What are the benefits?
The 30% ruling has several benefits besides the tax-free salary part. These are some other benefits of the 30% ruling:
- Partial non-resident status
A Dutch tax resident with the 30% ruling can choose to be treated by the Belastingdienst as a partial non-resident taxpayer of the Netherlands. This means that you will be considered as a non-resident taxpayer in Box 2 and 3. For Box 1 income you will still be considered as a resident taxpayer. So, in that case, you don’t have to pay income tax on assets in Box 2 and 3 (besides real estate located in the Netherlands and substantial shareholding in a Dutch BV) when you file the annual income tax return.
- Exchange of foreign driver’s license
Another great benefit of the 30% ruling is the possibility to exchange your foreign driver’s license. In most cases, you have to redo your driver’s license test in order to obtain a Dutch driver’s license. If you have the 30% ruling. It is possible to exchange your foreign driver’s licence for a Dutch license without redoing the test. And even all of your family members at the same address as the holder of the 30% ruling don’t have to redo the test.
How to apply for the 30% ruling?
To apply for the 30% ruling you and your employer have to ask the Belastingdienst permission to make use of the 30% ruling. You and your employer can ask for permission by filling out the following form: Application income tax and national insurance.
What are the conditions?
A number of conditions must be met to be able to use the 30% ruling:
- You work for an employer that is registered with the Dutch tax office and pays payroll tax.
- You and your employer have to agree in writing that the 30% ruling is applicable.
- You have to be transferred from abroad or have to be recruited abroad.
- You did not reside within 150km from the Dutch border for the last 18 out of 24 months at the time of hiring.
- Your salary is at least € 37.000,- per annum (special salary norms apply for certain employees younger than 30).
- You need to have an expertise that is scarcely available in the Netherlands.
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