Expat Service
30% Ruling - favourable Dutch income tax act for specialists
The Dutch wage tax act gives specialists meeting certain requirements the chance to apply for 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 the Dutch 30% ruling for the specialist from abroad
- Wage and income tax relief: 70% taxable salary, 30% tax free reimbursement
- Additional tax-exempted reimbursement for certain costs, e.g. the International School
- Change foreign driving licence into Dutch driving licence
- The entrepreneur can use the 30% ruling if employed by his corporation
- The 30% ruling can help the entrepreneur attract specialists 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 a way to be considered a deemed non-resident. This implies that the employee can benefit from regular personal income tax benefits such as 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 those of the 30% ruling, is that this employee is not taxable for all the days spent 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 spent outside the Netherlands. In other words the risk of double taxation on employee income is non-existent.
Advantages for entrepreneurs/employers
Entrepreneurs who 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 the company is foreign or a Dutch BV company is not relevant as long as it is a legal entity. If the requirements of the 30% ruling are met and the time-frame is correctly set, you can benefit from the advantages.
Should you not be able to meet the requirements, you can still benefit from the 30% ruling as an employer. If you attract a specialist from outside the Netherlands who qualifies for the ruling, 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 employer's costs with or without the 30% ruling will remain the same in that case.
