30% ruling

Favourable Dutch personal income tax act for specialists

30% ruling

The Dutch wage tax act provides specialists, who meet certain requirements, the possibility to obtain the so-called 30%-ruling. This 30%-ruling reduces the full Dutch taxable salary to a 70% taxable salary; the remaining 30% can be reimbursed exempted from wage or income tax by the employer. The 30%-ruling is therefore a substantial tax relief for all non-Dutch specialists, who have been attracted from abroad by Dutch resident employers.

Advantages of Dutch 30% ruling for specialist from abroad:

  • A relief in wage and income tax: 70% taxable salary, 30% tax free reimbursement;
  • Additional tax exempted reimbursement for certain costs, f.i. the international school;
  • Change foreign driving licence into Dutch driving licence;
  • Entrepreneur can use the 30% ruling when employed by his corporation;
  • The 30% ruling can assist the entrepreneur in attracting specialist from abroad;
  • Regular Dutch personal income tax deductions remain applicable;
  • No wealth tax (1,2% on average equity value);

Advantages for employees

The 30%-ruling provides the possibility to be regarded as a deemed non-resident. This implies that the employee can benefit from regular personal income tax benefits such as the mortgage deduction, however, a deemed non-resident does not need to report his or her wealth for the Dutch wealth tax (Box III, 1.2% on the average equity).

Advantages for employees being US nationals or US green card holders

The fact that US Nationals and US green card holders are subject to income tax in the USA based on their nationality in combination with the choice of being regarded as a deemed non-resident for Dutch personal income tax purposes will result in a non-resident status due to the tax treaty between the USA and The Netherlands. The advantages of being a non-resident in the Netherlands, besides the advantages of the 30% ruling, is that this employee is not taxable for all the days spend outside the Netherlands, irrespectively whether it was for business or pleasure, in the USA or in any other country. This employee can reduce his Dutch taxable income with these days spend outside the Netherlands. In other words the risk of double taxation on employee income is non existent.

Advantages for entrepreneurs / employers

Entrepreneurs that would like to set up their business in the Netherlands can also benefit from the 30%-ruling while being employed by their own company in the Netherlands, whether this is a foreign company or a Dutch BV company is not relevant, relevant is that it concerns a legal entity . When the requirements are met, set by the 30%-ruling and the time frame is set correctly, then you can benefit from the advantages.

Should you not be able to meet the requirements set then you can still benefit from the 30% ruling being the employer. When you attract a specialist that does qualify, from outside the Netherlands and you agree upon a net salary, the 30% exempted reimbursement and the exempted reimbursement of the costs of the International school will reduce the employers costs’ substantially compared to a non-30% ruling employee. A gross salary agreement with the employee will not lead to an advantage for the employer, as the employers costs with or without the 30%-ruling will remain the same in that case.

Do you have a tax question?

Orange Tax Services

tel. +31(0)20 553 96 65
Keizersgracht 62-64
1015 CS Amsterdam

This article has been submitted by Arnold Waal

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