August 2nd, 2023
The 30% ruling is a tax exemption designed to encourage skilled professionals that meet certain criteria to come and work in the Netherlands.
Both the employee and employer must submit an application to the Dutch Tax Office to initiate the granting process. If applicable, the 30% ruling means employees may receive a tax-free allowance of 30% of their gross salary. The application for the 30% ruling will need to be made simultaneously by both the employer and the employee. One of the biggest mistakes those applying for the 30% ruling make is to move to the Netherlands first. It is crucial that the entire process is carried out while the applicant remains living and registered in their home country.
The 30% ruling covers all employment sectors, but is only for contracted employees. It is possible to start a B.V. (A Dutch company) and employ yourself to receive the 30% ruling. However this company also needs to be established before the person in question arrives in the Netherlands.
Successful applicants under the 30% ruling can ensure that only 70% of their salary will be subject to income tax for a period of up to five years. This period may be shorter if the employee has lived in the Netherlands previously (the amount of time lived in the Netherlands will be deducted from the 30% ruling duration).
The criteria for eligibility are as follows.
- The employee must work for an employer that is registered in the Netherlands.
- The employer and employee must sign, in writing, that they wish to apply the 30% ruling.
- The employee was recruited while living and registered outside of the Netherlands.
- The employee earns more than EUR 41,954 per year (2023)
- The employee must have specific skills or expertise that are not widely available in the Netherlands.
There is a maximum salary for the 30% ruling too, which will come into effect in January 2024. This maximum cap also goes up each year. It is currently 230,000 EUR. Any earnings above this amount will be paid at the normal rate (which is the highest bracket of income and payroll tax).