The 30 ruling (30% tax ruling) is a tax facility for expats who are recruited outside the Netherlands to work in the Netherlands. This is meant as a compensation for the so-called extraterritorial costs which include the extra cost for accommodation and travel in a foreign country. The period is now 8 years, but the Dutch government has planned a reduction to 5 years from Januari 1st 2019, not retrospective.
The conditions for the 30% expat tax ruling:
- Posted or recruited from abroad; you must have lived in another country before accepting the employment;
- Specific scarce expertise; you must have a specific expertise, which is not or scarcely available on the Dutch
labour market; this will have to be proved in the 30 ruling request;
- Withholding entity with Dutch payroll; a Dutch payroll is needed where the Wages Tax is
withheld on your income; the 30% tax free grant must be deducted from the gross income.
The advantages of the 30 ruling:
- Tax free allowance of 30% of your salary;
- Tax exemption on income from savings and investments (except domestic real estate investments);
- Tax exemption on dividends from substantial shareholdings, except direct holdings in a Dutch company;
- Various other practical advantages, such as an easier procedure for acquiring a Dutch driving license.
In 2012 the 30% ruling changed which has both limiting and broadening effects.
The following restrictions have been introduced in the 30 ruling from 2012:
- The 30 ruling maximum grant period is reduced from 10 to 8 years.
- Periods of living and/or working in the Netherlands in the last 25 years are deducted of the 30 ruling (until 2011 the last 10 years were relevant);
- Dutch nationals must have lived and worked abroad for at least 25 years to qualify as incoming from abroad for
the 30 ruling;
- Anyone living within a 150 km radius from the Dutch border for 2/3 of the last 24 months will not qualify as incoming employee. Practically only employees hired from Germany and Belgium could be excluded.
On the other hand, positive news is:
- The “specific knowledge” requirement will be based on a minimum salary requirement of € 36.705,– taxable salary; consequently a salary of approximately € 52.000 inclusive the tax free 30% allowance is required;
- The 30 ruling will be opened up for young PhD graduates: if they take on a job directly after having finished their PhD in the Netherlands, they will be deemed to be hired from outside the Netherlands. In addition the minimum salary requirements will be lower for them: € 26.605 taxable income;
- For research scientists no salary criterium applies;
- The validity of 30 rulings granted before 2012 will remain unchanged.
For further information about the 30 ruling and what we can do for you, please click here.