The 30%-ruling
The 30%-ruling is a special expense compensation arrangement. An employee can be considered for this scheme if they come to work in The Netherlands or are sent abroad . It is a compensation of the Tax Authorities for the extra expenses that an employee makes in The Netherlands or abroad, the so-called extraterritorial expenses. As of the 1st of January 2012 the 30%-ruling has been adjusted on some points. The adjustments regarding the 30%-ruling have been processed in the Q&A below.
UPDATE 2024
If you hire a foreign employee with a specific talent or expertise, it is no longer possible to reimburse his or her costs for a move to the Netherlands tax-free indefinitely. On the other hand, there will be a maximum of 30% of the Top Income Standards Act (in Dutch).
What does the 30%-ruling entail exactly?
The ruling entails that 30% of the gross income can be granted tax- and premium free as a compensation for the extraterritorial expenses such as cost for moving. The bottom line is that employees will receive a larger net income. As demonstrated in the example below:
Normal situation: gross wages €1000,-
Tax €500,- (50%)
net wages: €500,-.
Situation with 30%-ruling:
Gross wages €1000,-
30%-ruling €300,-
Subtotal €700,-
Tax €350 (50% of 700)
Net wages: €350,-+ €300,- = €650,-
When is the 30%-ruling applicable?
The employee must have ‘specific expertise’. When attesting this specific expertise a certain salary standard applies that will be indexed on a yearly basis. For 2015 it is a matter of specific expertise if the employee has a fiscal annual pay of €36.705,- (excluding the free compensation) or more. For exceptions, besides the salary standard, the ‘scarcity requirement’ must be met. The so-called scarcity requirement entails that the employee’s expertise cannot be found, or is rare on the Dutch labour market. This is the case if nearly all employees in a specific sector meet the salary standard. For example, professional football players.
The employee must have lived at least 150km from the Dutch border at least, for 2/3 of the period of 2 years prior to the employment in the Netherlands,;
The Tax Authorities must have issued a decision which shows that the 30%-ruling can be applied.
How long does the 30%-ruling apply?
The decision for the 30%-ruling applies for a maximum duration of 8 years.
Transitional Law
Because the regulations have been adjusted per January the 1st 2012, the transitional law applies for employees that fell under the 30% scheme before the 1st of January 2012. There are two possibilities:
- The employee has not made use of the 30%-ruling for 5 years on the 1st of January 2012. After 5 years of use of the scheme, it will be assessed again if the employee meets the adjusted requirements. The 30%-ruling will expire if the employee does not meet the criteria.
- The employee has already used the 30%-ruling for more than 5 years. In this case there will not be a reassessment of the adjusted regulations. The regulations will remain the same as before December the 31st of 2011. The maximum duration in this case, is 10 years.
What influence does the 30%-ruling have on my obligation to pay taxes?
When you live in The Netherlands, you are generally obligated to pay taxes domestically and your income will be taxed accordingly. With the 30%-ruling you will get the possibility to choose for a partial foreign obligation to pay taxes. This means that you remain obligated to pay taxes domestically and you can continue to use to deductible possibilities in box 1, and for certain provisions (Profit from significant importance and income from saving and investment; box 2 and 3) is designated as a foreign obligation to pay taxes.
What influence does the 30%-ruling have on my pension accrual?
Applying the 30%-ruling has, in general, influence on the pensionable salary and the calculation basis for holiday- and year-end bonuses and the premiums for employee insurances. A benefit from the Unemployment Law (Dutch: WW) is calculated over the gross wages minus the 30%-rulingThis means that a possible benefit from the Unemployment Law will result in a lower amount. Pension over the 30% part can be replenished under certain conditions.
What about the addition car and the 30%-ruling?
The addition has influence on the 30%-ruling, With a company car you can take into account 70% of the catalogue value. You can add 70% of the catalogue value and include it as a basis for the 30%-ruling.
How can I apply for the 30%-ruling?
If you'd like to request a 30%-ruling, please contact us to make an appointment.
For any other questions, please do not hesitate to contact us at info@moneywood.nl.