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| Q: Do I need to file a Dutch Tax Return? |
| A: In general, you may need to file a Dutch tax return for any year in which you lived or worked in the Netherlands for any part of the year. If you have a SOFI (Social-Fiscal) Number in the Netherlands and worked or lived in the Netherlands, a form will normally be issued to you by the Dutch tax authorities (Belastingdienst). If you have received such a form, you are required by law to complete and submit a ta return for the year, even if you do not owe any tax in the Netherlands. If you did not receive an official form, you are still requred to submit a tax return for any year in which you had Dutch-sourced income (from employment, business enterprises, and/or (if you are a Dutch resident) for income from "worldwide" investments |
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| Q: What is 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 to the Netherlands by providing these employees with fiscal incentives. |
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| 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! |
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| 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 exempt from Dutch “net-wealth” taxation (with the exception of investments in Dutch real-estate) and exempt from taxation on any income from a substantial interest in a non-Dutch entity.
In addition, US Citizens and US Greencard holders can also claim tax exclusion for employment income that can be allocated to non-Dutch workdays. |
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| Q: Non-fiscal incentives? |
| 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. |
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| 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 to 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 candidate on the Dutch labor marker for that position.
Secondly, when the employees are recruited or assigned, they must have specific skills or expertise that is scarce on the Dutch market place. The determination whether the employee has specific skills or expertise that are scarce is determined on a case by case situation by the Dutch tax authorities. For this they will look at 3 factors:
1) Relevant work experience
2) education level
3) salary level
No single factor is determining, 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. |
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| 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 performing artist). Relevant work experience is work in the same field or at the same level as the position that you will be fulfilling in the Netherlands. Generally, the tax authorities only consider work experience from after your education degree. Again, this is determined on a case by case situation, so please contact us for assistance in this respect and to discuss your possibilities. |
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| 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. |
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| 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 these skills / expertise. For footballers income is even the only factor that is taken into account with a minimum required salary level of EUR 200,000 to EUR 380,000 depending on their age. 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.
Nevertheless, we have also successfully obtained the 30% ruling for employees with salary levels of EUR 30,000 arguing that the salary levels in their home countries are significantly lower and that the salary level should therefore be measured based on the salary levels in the home country (especially the case with countries such as China, India and Eastern European countries). In addition, scientists, researchers and employees working for charitable or artistic organizations usually have modest wages but can still be considered highly skilled and scarce. However, a low salary will generally require additional argumentation to the Dutch tax authorities. Please call us to discuss your specific situation and to see if your situation has a chance to success (fyi: we sometimes propose no-cure-no-pay service arrangements in cases where the salary level may become subject of discussion in the 30% application procedure). |
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| 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 his 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 provided. 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 previous applicants to prove scarcity on the Dutch labor market.
In addition to 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 application procedures for the 30% ruling and we 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. |
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| 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.
To protect your eligibility with retroactive effect, TaXpat normally files an “ex-officio” request before expiration of the 4 months deadline, in cases where employee or employer need more time to organize the required information. |
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| 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 month to 6 months or even longer. |
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| Q: What if my application for the 30% ruling is denied? |
| A:
If your application for the 30% ruling is denied, they 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.
If your letter of objection is also denied, you can file an appeal with the applicable Court. TaXpat has initiated several appeal procedures and successfully pleaded for many of our clients in the courts. Please call us to discuss your specific situation and ask for our special no-cure-no-pay service arrangements. |
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| 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
- spending more than 20 workdays in The Netherlands in one of the 10 calendar years prior to applying for the 30% ruling
- spending more than 6 weeks in total in The Netherlands in one of the 10 calendar years prior to applying for the 30% ruling
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. |
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| 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.
If the continuation is granted, the 30% ruling is granted for the remaining 60-month period, without any chance of retraction if your employment remains unchanged. |
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| 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 remainder of the 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 knowledge that may have been scarce 60 months ago but now is more common knowledge on the Dutch labor market. TaXpat can assist you with the request for continuation of your 30% ruling. Please call us to discuss your specific situation. |
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| 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. |
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| Q: What if I am not an employee? |
| A: Unfortunately you then will 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. |
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| 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.
And of course, with the 30% ruling the employer can offer a higher net salary resulting from a certain gross-salary budget; this enables him to become a more attractive employer to expats than without the facility, so he can better attract skilled employees for his business. |
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| 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. |
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| 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. |
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| 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 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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| Q: Do I need to file a US Tax Return since I am living outside of the US? |
| A: If you are a US citizen or resident (greencard holder), you must file a tax return for each year in which your gross income exceeds certain minimum thresholds (as low as $3,100 for the 2003 tax year). Note: You may not deduct the Foreign Earned Income and/or Housing Exclusions for purposes of determining your gross income for this purpose. You are legally required to report your worldwide income to the United States each year, even in you do not owe any taxes. Note that the US tax authorities are able to initiate a tax audit within the later of three years from the initial due date of the return or the date the tax return was filed. Therefore, if you never file a tax return, the statute of limitations for that year is never completed. |
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| Q: I am a US citizen (or greencard holder) and have not filed US taxes for several years. What are the implications of this? |
A: US tax authorities are able to initiate a tax audit within the later of three years from the initial due date of the return or three years from the date the tax return was actually filed. Therefore, if you never file a tax return, the statute of limitations for that year never start running.
However, it is not too late! Penalties and nterest are based on the amount due, so if you do not owe any tax, you will not face any penalties or interest.
If you are married to a non-US spouse and considering moving to the US, you will likely need to show (at a minimum) your last three years of tax returns to prove that you can provide support for your spouse. |
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