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F.A.Q.'s
Questions Regarding Dutch Taxes Questions Regarding the 30% Ruling (Dutch Tax Benefit) Questions Regarding US Taxes Questions regarding Dutch Knowledge Migrant Regulation 
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Questions Regarding the 30% Ruling (Dutch Tax Benefit)What are the fiscal incentives of the 30% ruling? That is a huge benefit. Any other fiscal incentives? Who can qualify for the 30% ruling? What is relevant work experience? What is the required education level? How important is the salary level? How do you obtain the 30% ruling? When do I apply for the 30% ruling? How long does it take before my request for the 30% ruling is approved? What if my application for the 30% ruling is denied? If granted, how long is the 30% ruling valid? If granted, can the Dutch tax authorities retract my 30% ruling? What if I do not file for continuation of the 30% ruling after the initial 60-month period? What if I do not have a Dutch employer? Does my company benefit from me having the 30% ruling? Are there any disadvantages of having the 30% ruling? I already have the 30% ruling, however, I am switching employers. Can I continue my 30% ruling?
A: The 30% ruling is meant to attract employees with specific skills or expertise that are scarce on the Dutch labor market in the Netherlands by providing these employees with fiscal incentives.
Q: What are the fiscal incentives of the 30% ruling? A: The most significant incentive or benefit is that employees are allowed to receive free from Dutch taxation the higher of either 30% of their employment income or the so-called extra territorial expenses (such as cost of living allowance, housing, home leave, etc.). In addition, employees are allowed to receive a tax free reimbursement for the expenses of an international school for their children. In a nutshell and in general, this means that 30% of your salary can be paid tax-free!
Q: That is a huge benefit. Any other fiscal incentives? A: Yes, in addition, employees who are granted the 30% ruling can opt to be considered as partial non-resident taxpayers of the Netherlands. By doing so, they will be exempted from Dutch "net-wealth" taxation (with the exception of investments in Dutch real-estate) and exempted from taxation on any income from a substantial interest in a non-Dutch entity.
A: Not really a fiscal incentive but equally beneficial is that with the 30% ruling you (and your spouse) are allowed to simply exchange your foreign drivers license for a Dutch drivers license without having to take an otherwise required 1.5 hour driving test.
Q: Who can qualify for the 30% ruling? A: The 30% ruling is meant to attract employees with specific skills or expertise that are scarce on the Dutch labor market in the Netherlands. First of all this means that employees either need to be recruited while outside the Netherlands or assigned to the Netherlands. The Dutch employer should be able to demonstrate that there was no other candidate on the Dutch labor market for that specific position.
No single factor is determining on its own, since all these 3 factors are taken into consideration in relation to each other for getting the 30% ruling ("specialist test"). Employees who are assigned to the Netherlands by their foreign employer, and who have worked more than 2,5 years in the group of companies, also qualify for the ruling ("job-rotation test"). Taxpat can assist you and your employer determining whether or not you meet the criteria set for this ruling.
Q: What is relevant work experience? A: In general, you need to have at least 2.5 years of relevant work experience to be considered for the 30% ruling. Exceptions to this rule are allowed in situations where the experience in a similar (foreign) employment is less relevant (for instance in the case of a highly talented/gifted artist). Relevant work experience is work in the same field or at the same level as the position that you will be filing in the Netherlands. Generally, the tax authorities only consider work experience obtained after your education degree. Again, this is determined on a case by case situation, therefore please contact us for assistance in this respect and to discuss your possibilities.
Q: What is the required education level? A: The Dutch tax authorities generally look for business or university degree. However, a specialized course or "training on the job" may also qualify if specific to the position in the Netherlands. This is commonly the case with a lot of technical and specific positions. Please call us to discuss your specific situation.
Q: How important is the salary level? A: The salary has a two-fold reference function as the salary level generally reflects the extent of the employee's expertise and/or skills and the scarcity of them. Again, this is determined on a case by case situation. For instance, the footballers income (salary level between EUR 200,000 - EUR 380,000) is the crucial factor being taken into consideration when assesing the 30% ruling eligibility. Luckily, for us mere mortals the salary levels are more attainable and are not decisive. In general an annual salary of EUR 45,000 should adequately prove to qualify for the 30% ruling.
Q: How do you obtain the 30% ruling? A: The request for the 30% ruling is filed with the Dutch tax authorities by (or on behalf of) both the Dutch employer and the employee. With the request, the employee must prove the level of employee's skills/expertise by providing a copy of his curriculum vitae, listing education level and previous work experience. In addition, a copy of the employment agreement (or assignment letter) must be submitted. The Dutch employer must provide a statement detailing the specific expertise of the employee in relation to the position. In addition, the employer can also provide information on the period the position was vacant and on the number of previous applicants to prove scarcity of employee's expertise on the Dutch labor market. Apart from proving skills/expertise and scarcity, the Dutch tax authorities will also need a copy of the employee's passport, a copy of the work permit (if applicable), the SoFi-number (or Burgerservicenummer) of the employee, address details, periods of previous stay in the Netherlands, company details and the company wage tax number. Taxpat has extensive experience with the 30% ruling application procedures and can organize the entire application procedure on your and your employer's behalf. We also advise employer and employee on the best way to draft and word the required information and statements. Last but not least, and once granted, we assist your employer with the implementation of the ruling in the salary administration and employment conditions. Please call us to discuss your specific situation and our proposal.
Q: When do I apply for the 30% ruling? A: Ideally the initial request for the 30% ruling should be filed within 4 months of the first working day in the Netherlands to ensure retroactive effect of the 30% ruling. If the application is filed after the 4-month period, the 30% ruling will only be effective as of the first of the month following the application.
Q: How long does it take before my request for the 30% ruling is approved? A: Eligibility for the 30% ruling is determined on a case by case situation. Approval will therefore depend on how easily the Dutch tax authorities can make this determination and the availability of information. The processing time can take anything between 1 to 6 months or even longer.
Q: What if my application for the 30% ruling is denied? A: If your application for the 30% ruling is denied, Dutch tax authorities will provide you with an explanation why you are not eligible for the 30% ruling. If you believe that you are eligible for the 30% ruling, you can file a letter of objection against the denial with the Dutch tax authorities. This should be done within 6 weeks of receiving the letter of denial.
Q: If granted, how long is the 30% ruling valid? A: The 30% ruling is granted for a maximum period of 120 months. However, periods of previous stay or work in the Netherlands are deducted from the 120-month period. The rules to calculate these deductions are very complicated. For example, if you spent short periods of time in the Netherlands in the preceding 10 years, these periods will be deducted from the maximum 120 months and the look-back period is limited to that preceding 10-year period. However, if you had substantial periods of stay in the Netherlands then the look-back period may be extended to the preceding 15 years or even longer. For this purpose, substantial periods of stay in the Netherlands are:
In addition, the Dutch tax authorities do allow a one off period of 3 consecutive months in the Netherlands during the 10 years prior to applying for the 30% ruling. So, if you previously "substantially" lived, worked or just stayed in the Netherlands and left less than 10 years ago, the Dutch tax authorities will extend the reference period which may sometimes have the result that the 10 year period is reduced to 0 years. There are currently discussions on how the deduction and the rounding to whole months should be done. Please call us to discuss your specific situation.
Q: If granted, can the Dutch tax authorities retract my 30% ruling? A: The 30% ruling is granted in fixed periods of 60 months. After the first 60-month period, you can file for the continuation of the 30% ruling for the next 60-month period. This is usually an administrative formality and generally only requires a short statement from the employer verifying that your skills / expertise are still scarce.
Q: What if I do not file for continuation of the 30% ruling after the initial 60-month period? A: After the first 60-month period has ended the 30% ruling will still remain applicable for the remaining term of 120 months. However, the Dutch tax authorities can request you and/or your employer to prove that your skills / expertise are still scarce on the Dutch labor market, at any time during the second 60-month period. Proving this will require detailed arguments and statistics. If your skills are no longer scarce, the 30% ruling will be retracted from that moment. This adverse consequence can be avoided by obtaining the continuation approval before the first 60-month period has ended. Especially employees working in IT related fields should be keen on securing the continuation; they are usually granted the 30% ruling because of scarce knowledge they bring to the Dutch market at that particular time. However, after 60 months it may turn out that the scarcity of their skills/knowledge is not the case anymore. Taxpat can assist you with the request for continuation of your 30% ruling. Please call us to discuss your specific situation.
Q: What if I do not have a Dutch employer? A: The 30% tax free allowance needs to be calculated through a Dutch payroll and requires payment of Dutch wage tax withholding to the Dutch tax authorities. Generally, this is done by a Dutch based company. However, certain foreign employers can also register themselves on a voluntary basis in the Netherlands for wage tax purposes and facilitate Dutch wage tax payments to the Dutch tax authorities. This generally does not mean that the foreign employer attracts Dutch corporate taxation issues. Taxpat can assist with the Dutch registration of the foreign employer, setting up the (administrative) Dutch payroll and initiating the tax payments to the Dutch wage tax authorities. Please call us to discuss your specific situation and possibilities.
Q: What if I am not an employee? A: Unfortunately you will then not qualify for the 30% ruling as the tax facility only applies to employment situations and the ruling requires that it is implemented into a Dutch payroll administration by a Dutch based (or registered) employer. Self-employed persons do not have an employment relationship or need to fulfill any payroll requirements. However, if you are self-employed through your own legal entity (such as a BV or a Ltd.), the 30% ruling can be applied for.
Q: Does my company benefit from me having the 30% ruling? A: As stated under "fiscal incentives of the 30% ruling", 30% of your employment income can be paid net (without any Dutch taxation) to the employee. Therefore, the basis for the determination of tax and social security is only 70% of your total employment income. This basis is also used for determining the employer's part of Dutch social security and pension entitlements (premiums). Therefore, the Company can indirectly benefit depending on the employee's salary level.
Q: Are there any disadvantages of having the 30% ruling? A: The 30% reduces your employment income to 70% (the other 30% ruling is considered a tax free expense reimbursement) of the original agreed salary. Consequently, this 70% will be the basis for accruing your pension entitlements and social security benefits. Especially, with your pension you may be underinsured. However, Taxpat can assist you and your employer in developing facilitating alternatives to avoid or minimize such deficiencies.
Q: I have been here for 2 years already but just found out about the 30% ruling. Can I still apply for the ruling? A: Yes, you can still apply. However, you have to meet the criteria set for the 30% ruling on the day that you arrived in the Netherlands (i.e. 2 years ago), so not at the moment when you file the application. Therefore, please call us to discuss your case and receive initial advice.
Q: I already have the 30% ruling, however, I am switching employers. Can I continue my 30% ruling? A: Yes, you are able to continue your 30% ruling with a new employer. However, the period between the last day of work for your old employer and the start date with your new employer can NOT exceed 3 months. Furthermore, a new application in the name of yourself and your new employer needs to be filed within 4 months after your start date of new employment (in order to receive the new 30% ruling as of the first working day at your new employer). There are currently discussions on how the 3 months period should be interpreted. Taxpat has also been successful in Court to stretch the 3 months period for specific situations. Please call us to discuss your specific situation.
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