What is the 30% Ruling in the Netherlands?

Immigrants who have employment opportunities in the Netherlands can enjoy some relief from taxes with the 30% ruling. 30% of your taxable income will be tax-free if you’re eligible for the 30% ruling. The 30% ruling is a tax policy by the Belastingdienst to cover the unusual or extra cost of living you may incur from migrating and working in the Netherlands. New expats may find the cost of living strange or significantly high since immigration is relatively expensive. 

Moving to the Netherlands or any country is expensive. It’s even more expensive for people who temporarily stay as opposed to permanent residency for a period. Let’s show you an easy way out with the 30% ruling.

 

Do I get 30% more money or 30% tax-free income?

Neither. The 30% ruling means that you get paid 30% less of your actual income. In exchange, you get 30% off on your tax payments. This is the most common arrangement you can work with between you and your employer. Alternatively, you can pay a tax equivalent of 36.2%.

Another common arrangement is to get 30% of your gross annual income free from tax, supervised by Belastingdienst . This is the most common way to calculate the monetary value of the 30% ruling in the Netherlands. Contrary to old policies, expats can enjoy the 30% facility tax for up to five years in the Netherlands. The former policy was eight years but has become null since January 2019. Still, the government has a compensation plan for those the policy change affected.

 

Who’s Eligible for the Dutch 30% Ruling?

An expat with rare skills needed in the labour market and is currently employed in the Netherlands is eligible for the 30% ruling. Usually, these expats get jobs that pay more than €39, 467. People younger than 30 with a master’s or  PhD in the Netherlands or other countries are also eligible for this tax relief, provided they work in the Netherlands. Doctors or researchers working in a research facility can also apply for the 30% ruling.

Immigrants transferred to the Netherlands can apply, provided they have lived more than 150km away from the Dutch border for up to two years before their transfer. It’s important to note that your employer must sign necessary documents that endorse and agree to your 30% ruling application.

Entrepreneurs can enjoy this tax relief if they can make a case. Suppose you legally define your company as a separate legal entity (e.g. limited company)  from yourself. In that case, you can get tax relief as an employee of your company. You wouldn’t get this tax relief if you started your company in the Netherlands. Instead, start abroad, and transfer your business to the Netherlands. 

 

Why the 30% Ruling?

The 30% ruling aims to provide tax relief to expats in the Netherlands. It also serves as a form of reimbursement for unavoidable expenses incurred from immigrating to the Netherlands. Expenses this tax relief could cover include: Travelling expenses, telephone bills to their local country, driver’s license, visa, residence permit, hotel expenses, water bill, energy bill, housing costs or rents, amongst others.

Talking about rent or homes, word on the real estate market says it’s not so easy to find one. You should keep these things in mind when searching for rental apartments or houses in the Netherlands. Like in other countries, locations determine prices, and some job opportunities are also possible within some locations. You must pay attention to the type of “furnishing” and rental contract in the Netherlands. 

 

What more do you get from the Ruling?

If you meet the requirements for the 30% ruling, you can leverage it for other purposes. For example, entrepreneurs can use it to attract more skilled expats to their companies. You can also select non-resident status on your income tax form. Fill in non-resident status on box 2 and box 3 as part of your income tax form, and you can avoid paying tax on your assets. The only exception to this rule is real estate investments and assets. 

You could also get a free allowance, relief fund, or support when you decide to go to school in the Netherlands. This tax relief or allowance is obtainable for expat kids or expats who are looking to further their education in the Netherlands. You can get a dutch driving license in exchange for your local driving license without needing to attend a driving school with the 30% ruling. These are the common perks expats with 30% ruling can enjoy in the Netherlands.

 

How to apply for a 30% ruling

You can apply for a 30% ruling here. Please note that the 30% ruling is valid when you switch employers within three months of terminating your job with your previous employer.