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30% Ruling – favourable Dutch Income Tax law for specialists

The Dutch wage tax law provides specialists, who meet certain requirements(education, special skills etc.) the opportunity to apply for the 30% ruling.
The ruling reduces the Dutch taxable salary to 70% of the nominal salary, so that only on this 70% the tax is levied and the remaining 30% is paid out as tax free expenses.
The employee does not need to provide bills to qualify for this 30% expenses which relieves employer of a lot of extra work.
This 30% ruling is therefore a substantial tax relief for all non-Dutch specialists who have been recruited from outside this country.

Advantages of the Dutch 30% ruling for the specialist from abroad

  • Wage and income tax relief 70% taxable salary and 30% tax free reimbursement
  • Additional tax-exempted reimbursements for certain costs(International schooling )
  • Change foreign driving license into Dutch driving license
  • The 30% ruling can be used for the entrepeneur if employed by a coporation
  • The 30% ruling can help the entrepeneur to recruit specialists from abroad
  • Regular Dutch personal income tax deductions remain applicable(f.e. deduction of mortgage interest on the family house whether in the Netherlands or abroad under certain conditions)
  • No wealth tax (box 3) applicable

 

 

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 interest relief.
He also does not need to report his wealth income in box 3(levy 1,2% of capital)

Advantages of 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 the US based on their nationality in combination with the choice of being regarded as deemed non-resident for Dutch personal income tax, will result in a non-resident status due to the tax treaty between the USA and the Netherlands.
The advantage of being a non-resident in the Netherlands, besides those of the 30% ruling,is that this employee is not taxable for the days spent outside the Netherlands, irrespectively whether it was for business or private purposes in the USA or any other country.
This employee can reduce his Dutch taxable income with these days spent outside the Netherlands.

Advantages for entrepeneurs/employers
Entrepeneurs 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, they can benefit from the ruling.