Foreign employees hired by a Dutch employer can be entitled to the so called 30% tax ruling. This means that 30% of the gross income is being paid without any taxes withheld on that part. This is results in a much higher nett spendable income.
From 2022, the taxable salary for an employee can't be under €39,647. A minimum salary of €30,001 is applicable for those who have completed a Master's degree and are younger than 30 years old. This means that by taking into account the 30% tax ruling, your salary can't become less than these amounts. Furthermore, for scientific researchers, employees working in scientific education or doctors in training, no minimum salary is required. Please note that there are restrictions regarding the companies or institutions for which this group of employees can work.
The application for the 30% rule must be made within 4 months after starting in the job. If the application is made after the four months period the ruling can only be granted from the next month after the application. This longer period is then deducted from the maximum period of 8 years.
During the 8 years period the Revenue Service is entitled to check if the employee still meets the criteria of the ruling. If not then the ruling is ended.
Employees working in the Netherlands under the 30%-ruling are entitled to the following tax advantages:
1. approximately 30% of their gross salary is paid as a tax-free '30%-cost reimbursement';
2. for other income elements than salary, they can choose for the so-called deemed non resident taxation.
3. Capital gains (e.g. on the sale of a real estate or shares) are not taxable in the Netherlands.
The taxation on Item 2. depends on whether the employee is considered a resident tax payer or a non-resident tax payer. In principle:
1. resident tax payers are employees who are living in the Netherlands;
2. non-residents tax payers are employees who are not living in the Netherlands.
Practically every resident taxpayer in the 30%-ruling will choose for the so-called partial taxation. This means that only a limited number of income elements are taxed in the Netherlands, like: a. the salary from Dutch and if applicable also foreign employment (incl. a company car);
b. income from a main residence in the Netherlands. (if your main residence is abroad, you normally are a non-resident.);
On the other hand, they are entitled to deduct extraordinary expenses like medical expenses, major charitable donations and alimony payments. And besides that they have the claim on the general tax credit for their spouse (so-called 'heffingskorting').
In principle you are considered a non-resident if you and/or your spouse and family are (still) living abroad (outside the Netherlands). Although you have the option to be considered a resident taxpayer. Therefore we will give you some general remarks regarding these 2 different fiscal options:
a) non-residents are not liable for Dutch taxation for foreign working days, holidays and sick days (this means days spent outside the Netherlands). These days are taxable in their home country. The difference in the Dutch and home country tax rates could lead to a tax benefit; or
b) non-residents have the option to be taxed like resident tax payers (partial taxation like in Item 1.). This implies that they loose the opportunity to deduct the foreign days as mentioned earlier, but might be able to deduct the mortgage interest in their foreign home. The request for the partial taxation can be made together with the application for the 30%-ruling, but ultimately when the tax return is filed.
How long can you claim the 30% tax ruling?
You can claim the 30% tax ruling for 5 years. This has changed in 2019. Before this used to be 8 years.
What if you change jobs?
This is not a problem, you do have to reapply for the 30% ruling. If your conditions didn’t change this will be ok.
Does the 30% tax rule apply for self-employed workers?
No, unfortunately. The rule is only for employees.
Do i need to take my Driving license test again?
When you benefit from the 30% ruling, it is possible to exchange your foreign driving license for a Dutch license without having to take the test again.
Dutchtaxadvice focuses on helping non-Dutch speaking individuals and entrepreneurs with their Dutch taxes. Our clients are for example expats who come to work in the Netherlands temporarily.
Witlox offers international Tax Advice for filing Dutch tax returns, 30% ruling and US tax returns.