The 30% Ruling for Expats in the Netherlands
Since the whole process of applying for the 30% ruling must be done in a structured manner, we advise you to consult a tax advisor to assist you with the application.
Introduction to the 30% Ruling Facility
What does the facility entail?
The 30% ruling facility is a Dutch wage (and income) tax facility which basically allows an expat to receive 30% of their salary tax-free. In addition, tuition fees for expat children who attend primary or secondary school at an international school and international departments of non-international schools may be reimbursed tax free by the employer. The tuition fees may be reimbursed up to the amounts charged by the school according to its rates for education, with the exception of costs and accommodation expenses but including travelling expenses.
To whom does it apply?
Expatriates who have been assigned to the Netherlands, or are recruited from abroad to work in the Netherlands and qualify as an extraterritorial employee.
What is the goal of the facility?
The facility aims to cover (some of) the additional costs incurred in connection with an expat’s temporary stay outside the home country. These additional costs are defined as “extraterritorial expenses” and can be reimbursed up to the amount of actual expenses incurred (which have to be substantiated) or as a fixed tax-free allowance of up to 30% of the normal wage taxable (without having to provide any proof of the costs incurred), to be referred to as the “30%-allowance”.
When can it be obtained?
The expatriate must have specific skills which are scarce on the Dutch labor market.
What is the effect of the facility?
The employer may pay the employee a fixed tax-free allowance of 30% of the employee’s wages.
Duration of the 30% ruling facility?
The employee can benefit from the 30%-ruling for a period of eight years. Periods of earlier employment or stay in the Netherlands that ended less than 25 years prior to the start of the current Dutch employment will be deducted from the total length of the 30%-ruling.
The 30%-ruling ends at the last day of the pay period after the pay period in which the employment ended.
Additional Advantages of the 30%-Ruling
Deemed Non-resident Taxpayer
An expatriate who qualifies as a resident taxpayer of The Netherlands, can opt to be taxed as a deemed non-resident taxpayer. The advantage of this election is that as a deemed non-resident taxpayer, the expatriate need not report any investment income to the Dutch Revenue (except for income from Dutch sources, such as Dutch real estate).
The choice will be made in the application form but can be changed every year. The expatriate can still deduct certain personal expenses (i.e. alimony payments, medical expenses etc.).
Expats to whom the 30%-ruling applies can exchange their foreign driver’s license for a Dutch license. This can be an advantage for expats from non EU-countries (EEA and Switzerland included), who can only use their foreign driver’s license for six months after their date of registry in the Netherlands. After this period, they will need to obtain a Dutch license. This implies needing to take a standard theory and practical test at the Central Office for Motor Vehicle Driver Testing.
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