30% RULING

The 30% ruling is a Dutch tax facility aiming at attracting foreign employees with specific skills or expertise to work in the Netherlands. On this page you will find a brief overview of the 30% ruling including the conditions, the application procedure and two fictional examples.

GENERAL

The 30% ruling provides a tax free allowance (30% allowance) which is deemed to cover all so-called extraterritorial costs. Extraterritorial costs are defined as the extra costs for staying outside of the country of origin. Such costs relate for example to:

Application of the 30% ruling gives rise to a substantial increase in net salary for the employee and substantial reduction of employer’s costs.

CONDITIONS

DURATION

The 30% ruling can be granted for a maximum of 5 years (60 months). This period will be reduced with earlier periods of stay or employment in the Netherlands.

SALARY NORM

APPLICATION PROCEDURE

EXAMPLE 1

  • the employee is 30 years or older.
  • the employee works in the Netherlands for a full calendar year (tax year).
  • the 30% ruling is applicable for a full year.
  • the annual gross salary of the employee amounts to € 45,000.
  • based on an addendum the agreed gross salary is reduced for employment law purposes because of the 30% allowance.
  • the salary norm is € 38,961 (2021).
  • tax credits have not been taken into account.
Without 30% ruling (EUR) With 30% ruling (EUR)
Gross salary 45.000 45.000
30% allowance 0
_____
6.038
_____
Taxable income 45.000 38.962
Subtract: tax / social security 16.695 14.455
Add: 30% allowance 0
_____
6.038
_____
Net salary 28.305 30.545

In this example, the 30% allowance amounts to € 6,038. This is less than 30% of the salary. If the 30% allowance would be higher, the salary (excluding the 30% allowance) would not meet the salary norm of higher than € 38,961.

This example shows that the benefit of the 30% ruling is € 2,240 (€ 30,545- € 28,305).

EXAMPLE 2

  • the employee is 30 years or older.
  • the employee works in the Netherlands for a full calendar year (tax year).
  • the 30% ruling is applicable for a full year.
  • the annual gross salary of the employee amounts to € 60,000.
  • based on an addendum the agreed gross salary is reduced for employment law purposes because of the 30% allowance.
  • the salary norm is € 38,961 (2021).
  • tax credits have not been taken into account.
Without 30% ruling (EUR) With 30% ruling (EUR)
Gross salary 60.000 60.000
30% allowance 0
_____
18.000
_____
Taxable income 60.000 42.000
Subtract: tax / social security 22.260 15.582
Add: 30% allowance 0
_____
18.000
_____
Net salary 37.740 44.418

In this example, the 30% allowance amounts to € 18,000. This is 30% of the salary. This example shows that the benefit of the 30% ruling is € 6,678 (€ 44,418 – € 37,740).

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