The 30% ruling and other tax advantages

The 30% ruling is a Dutch tax facility aiming at attracting foreign employees with specific skills or expertise to work in the Netherlands. 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. Application of the 30% ruling gives rise to a substantial increase in net salary for the employee. When the conditions are met, this tax advantage currently lasts 5 years, in the past this was 8 years.

In order to be eligible for the 30% ruling the employee should:

• be recruited or assigned from abroad The Netherlands. This criterion implies that, to be on the safe side, the Dutch employment or assignment agreement has to be signed before arrival in the Netherlands.
• have a Dutch withholding agent (Dutch employer or payroll company) for Dutch wage tax purposes.
• have specific skills or expertise that is not or only scarcely available on the Dutch labour market. An employee is deemed to have specific skills or expertise if the annual taxable salary (excluding the tax free 30% allowance) meets the salary norm. Apart from that, the skills or expertise should be not or only scarcely available on the Dutch labour market.
• have lived more than 16 months of the 24 months preceding the Dutch employment outside a radius of 150 kilometres from the Dutch border

For the application of the 30% ruling a joint request must be filed by the employer and the employee. If the request is filed within four months as from the first day of employment, the 30% ruling retroactively applies as from that first day of employment. If the request is not filed within four months, the 30% ruling only applies as from the first day of the month following the month during which the request was filed.