Please note that the following blog aims to provide more information about the Dutch 30% ruling. However, the information provided does not extend to a detailed description of the legislation regarding the 30% ruling in full. Consequently, the reader of this blog is will have more understanding about the topic but the reader will not be able to apply for the 30% ruling independently. Moreover, the application for the 30% ruling is a custom made process. Therefore, Arslan | Lit advises you to always seek advice from a Dutch NOB associated tax advisor. Finally, please note that no rights can be derived from this blog.
The 30% ruling is a facility within the Dutch wage tax act 1964. It is one out of 2 possibilities to reimburse expats for their extraterritorial expenses (the extra costs of working outside the country of origin, such as travel costs, accommodation costs and the cost of living). Either the actual extraterritorial expenses are reimbursed by the employer for five years or employee and employer choose to apply for the 30% ruling which if approved is valid for five years.
The 30% ruling allows for a maximum of 30% of the gross salary to be received net by the employee, as long as the minimum taxable salary is at least € 38,961 (2021). This means that if you earn a gross salary of € 100,000, only € 70,000 is considered taxable salary. However, if you earn a salary of € 50,000 the minimum taxable salary of € 38,961 is taxed. Consequently, to becoming a employee in the Netherlands, you will be regarded as a resident of the Netherlands for tax purposes. In principle a tax resident needs to report his worldwide income in his tax return. However, due to the 30%ruling you are considered to be subject to Dutch personal income tax as a non-resident regarding Box 2 and regarding Box 3. Consequently, you will pay less Dutch personal income tax.
Please note that upon becoming an employee in the Netherlands, you will also be subject to Dutch social security contributions. Consequently, you will contribute to the Dutch state old age pension (AOW) and you will contribute to Dutch Healthcare Insurance (ZVW). Furthermore you are required to acquire a healthcare insurance with a registered Dutch Healthcare insurance agency of your choice.
The following requirements are the main requirements which need to be met in order to apply the 30%ruling. Please note that these requirements have been applied more strict over the years as the Dutch Tax Authorities interpreted legislation and case law without being challenged. Therefore, anyone applying for the 30% ruling should always consult a tax advisor as indicated above.
- An employee has to be considered an “incoming” employee. In principle this means that the employee has not resided in the Netherlands before and that the employee has an employment agreement with a Dutch employer prior to becoming a Dutch resident for tax purposes;
- In the two years prior to your first workday in the Netherlands, you resided for at least 16 months of those 24 months at a distance of more than 150 kilometers in a straight line from the Dutch border;
- Your taxable salary is at least € 38,961;
- Different requirements apply to scientific researchers and to individuals under the age of 30 with a master title from a by the Dutch acknowledged educational institution.
Eligible individuals for the 30%ruling
- An employee who has agreed upon an employment agreement with an employer based in the Netherlands;
- A individual who incorporates a Dutch limited liability company (besloten vennootschap) and becomes an employee of his own BV.
Next to the conventional employee who will be hired by a third party in the Netherlands based employer, it is also possible for an entrepreneur who incorporates his own BV (besloten vennootschap) and becomes an employee of that BV. A BV is a Dutch legal entity and therefore subject to Dutch corporate income tax. Consequently, a BV can hire an employee (including it’s 100% shareholder) and the 30%ruling can be applied for it the requirements are met. In this case minimum taxable salary amounts to € 47,000 (2021).
Please note that entrepreneurs emigrate to the Netherlands and organize a sole proprietorship can’t apply for the 30%ruling because a sole proprietorship is transparent for tax purposes and consequently can’t employ its owner.
Residency as a highly skilled migrant and the 30%ruling
In most cases the application for a Dutch residency which is most likely to succeed, is the residency acquired as a so called “highly skilled migrant”.
Now you can acquire this residency as an employee of a third party in the Netherlands based company but you can also acquire this residency as a highly skilled migrant of your own BV.
One of the criteria to apply for the highly skilled migrant residency is the monthly gross salary requirement of € 4,752 per month. This sums up to an annual gross salary of € 57,024.
If you then also successfully apply for the 30%ruling, only € 38,961 of the aforementioned € 57,024 is actually taxed because you are then able to receive € 17,107
(30% * € 57,024) net.
However, if you have applied for the highly skilled migrant residency and you will be employed by your own BV, your required minimum taxable salary will be € 47,000. Thus, your tax benefit under the 30% ruling is then approximately € 10,000.
Additionally, the new BV has to acquire sponsorship status from the IND in order to hire highly skilled migrants. As this process can only be initiated upon incorporation of the BV and will take some months, the employee needs to be hired by a payroll company with sponsorship status until the BV acquires its own sponsorship, else the IND requirements are not met.
The Dutch payroll company will then second the highly skilled migrant to its own BV in order for the migrant to be able to work for the BV.
In this case the 30% ruling can be applied for as an employee of the payroll company with a minimum taxable annual salary of € 38.961 and upon approval, the 30% ruling can once more be applied for when the BV acquires the required IND sponsorship and the highly skilled migrant becomes an employee of its own BV with a minimum taxable annual salary. Naturally, the minimum required salary to be paid by the employer remains at € 57,024 whether employed by the payroll company or by the BV.
 NOB: Nederlandse Orde van Belastingadviseurs (Dutch Association of Tax Advisors)