What is the 30% tax ruling?
The 30% ruling is a tax perk for expats in the Netherlands.
In its most basic interpretation – if you are approved for this tax ruling, that means 30% of your gross salary won’t be taxed for a maximum of five years. That means the net salary that hits your account at the end of the month is higher.
The 30% ruling also allows you to:
- Swap your foreign driver’s license for a Dutch one automatically (otherwise, expats from most non-EU countries need to pass the Dutch driving exam from scratch in order to get a driver’s license). Your partner can also do the same.
- You and your fiscal partner are exempt from filing income taxes for your shareholdings, investments, savings (box 2 and box 3)
- Your employer can reimburse you specific costs tax-free (like your children’s education costs, provided these are incurred at an institution specialized in educating expatriate children in the Netherlands, as well as the relocation costs for you and your family)
If granted, the ruling is valid for five years from the beginning of your employment. At the end of the five-year period, the ruling simply expires and your full salary is taxed according to the usual tax brackets – which means your take-home salary becomes lower.
In order to apply for the 30% tax ruling, you need to make sure you check all of these boxes:
- You are an employee who was hired from abroad. This means that you signed your employment contract, or at least accepted the job offer before you arrived in the Netherlands and registered at a municipality.
- You have specific expertise that is hard to find on the Dutch market. This one can sound confusing, but in practice it’s very simple – you prove that you have specific expertise by having a salary that’s high enough (mentioned below)
- During the 24 months prior to starting the employment, you have not lived within 150 km of the Dutch border for more than eight months.
- Your salary fits within the salary criteria. In 2023, the minimum salary you need is €41,954/year. If you’re younger than 30, and have a masters degree from a Dutch academic institution, then your minimum requirement is lower, and you need to earn at least €31,891/year. If you conduct scientific research, or you’re a doctor training to be a specialist – the minimum salary requirement doesn’t apply to you.
Last but not least – your employer needs to agree with the application for the 30% ruling. This is normally done as a part of your employment contract, or as a separate contract addendum.
As the tax consequences are there for both the employer and the employee, you cannot apply for this facility without the employer’s consent. Why would any employer not want to grant this generous perk? Well, sometimes the employer will say this would not be fair to other employees, and they strive to offer everyone equal terms. Sometimes they believe their compensation package is already so generous that it makes no sense to go for this additional benefit.
In some cases, the employer’s HR department is either not knowledgeable enough on this topic, or doesn’t have the capacity to handle the additional paperwork. If that’s your situation, please feel free to refer your employer to us, and we’d be happy to help out!
It’s very important that the application for the 30% tax ruling happens within the first four months from your employment start date.
Please include a printed employment contract signed by you and your employer in your submission. If you signed the employment contract after you arrived in the Netherlands, please provide evidence that you agreed to the job before coming here. You can send emails or any other communication as proof. Other important documents include your resume and sometimes your education certificates.
The Belastingdienst aims to respond to you within 8 weeks. But don’t worry, once the application is approved – the ruling will be applied to your salary retroactively, and it will be valid from the start date of your employment.
If you check all the boxes for the eligibility criteria, you can almost 100% expect a positive decision.
If you unexpectedly get a negative decision, then you have six weeks to file a complaint and get the decision overturned.
30% ruling addendum
Companies often offer you a salary that includes the 30% rule. Later, they tend to give you an addendum asking for your permission to reduce your salary. This can raise questions among expats, and understandably so.
Many expats believe they receive their salary plus 30% untaxed benefits, but actually, it’s 70% taxable salary and 30% untaxed, hence the ‘salary decrease’.
You won’t notice this difference in your monthly income, but it can affect social security benefits since they are based only on your net income, without considering the 30% allowance.
What happens if you change a job, or your situation changes?
We have both good news and bad news here.
The good news is you can take your 30% ruling and transfer it to your next employment. After all, this is a tax perk for employed individuals, so as long as you have your employment status – you can keep it.
The (potentially) bad news is that changing jobs means you need to re-apply for the 30% ruling, which again means your new employer needs to agree with it as well. If the 30% ruling is important for you, make sure to ask about it before accepting the new offer – to make sure to avoid any surprises.
If you happen to lose your job, and you’re receiving any kind of unemployment benefits – as long as these also match the salary criteria, nothing changes and you can keep your benefit until you find your next job.
As mentioned above, this tax perk is intended for employed individuals, so the tax authorities give you 3 months to find a new job. If you don’t manage to do it within that deadline – the 30% ruling is gone, and you cannot apply for it again.
If you choose to leave the Netherlands before completing a full year of work, you won’t be required to meet the minimum salary requirement for a full year. Instead, it will be adjusted to a monthly salary, and the 30% rule will be applied accordingly (if you meet the necessary criteria).
As this is such a desirable tax perk, there are of course quite a few misunderstandings in the expat community. Here are some of the most frequent ones we’ve encountered:
- You need a Highly Skilled Migrant visa in order to be eligible for the 30% ruling ❌
This is not true. As long as you fit in with the eligibility criteria, you can apply for this facility no matter the visa you hold.
- You’re eligible only if you have a masters degree ❌
The only factor needed to prove your specific expertise is having a salary that’s high enough. It’s also good if your CV shows at least 2 years of experience in the given area, but that’s not always necessary.
- You can apply for the 30% ruling if you find a job within 4 months from arriving to the Netherlands ❌
You need to be recruited from abroad, which means you signed your contract, or at least accepted the job offer before you arrived in the Netherlands and registered at the municipality. If the contract wasn’t signed, it’s possible to prove you accepted the job offer by disclosing the email correspondence between you and the employer.
- You can prove that you were hired from abroad by disclosing a signed letter from the employer ❌
The tax authorities want to see proof that you were indeed recruited from abroad. As mentioned above, email correspondence can be used as proof. But if the employer discloses a letter that says “We swear this person was hired from outside of the Netherlands”, that won’t be sufficient proof.
Changes from 2024
In October 2023, the Dutch government has announced changes to the 30% scheme.
We’ll keep you updated on all the changes right here.