The 30% Ruling
Tax breaks for expats in the Netherlands
The Netherlands is known for its high standards of living, great infrastructure and a stable economy that appeals to many expats. However, the notoriously high tax rates are likely to make anyone think twice about working there. Fortunately, some expats are entitled to a tax reduction.
This tax benefit is called The 30% Ruling (De 30% Regeling). It allows employers to pay skilled foreign employees 30% of their wages tax-free without providing any further evidence of their expenses. The idea is that expats are likely to have expenses that native workers don’t have like managing a property abroad or making long distance calls to friends and family. Of course, if your expenses total more than 30% you can put in a claim with the necessary documentation.
The main objective of The 30% Ruling is to attract employees with specific skills or expertise to work in the Netherlands, so unfortunately it’s not applicable to every expat. In order to be qualified, there are several conditions that the employer and employee must meet. First of all, the employees need to be recruited from abroad or assigned to the Netherlands from a Dutch firm, therefore they have to prove that they were living in another country before. Also, the employer has to prove that the employee is important to the company and that they could not successfully find someone else from the Netherlands for the position.
As mentioned before, the employee needs to have specific skills or expertise that are scarce in the Dutch marketplace. To determine whether these skills are qualified, the Dutch tax authorities will also take other factors into consideration, such as relevant work experience, age, salary, education level, etc.
Besides the tax reduction - which is substantial considering income tax can be as high as 52% in the Netherlands - there are also other benefits associated with The 30% Ruling. For instance, you can change your foreign driving licence to a Dutch driving licence without redoing the test. You can also set your taxpayer status as “partial non-residency”, which could also result in a tax benefit.
For more information on how to calculate the tax breaks on offer to expats in the Netherlands, contact the Dutch tax office www.belastingdienst.nl/contact/en/
Also in this section
- Banking: Opening an account
- The 30% Ruling: Tax breaks for expats in the Netherlands
- Banking Services: What can you expect from your bank
