The 30% ruling
The Dutch government is keen on making working in the Netherlands attractive for expats, especially for highly skilled migrants. These are expats that have a specific expertise which is unavailable or rare in the Dutch labour market. Those expats can make use of the ‘30% ruling’, a tax facility which compensates extraterritorial costs.
Under this rule, your employer may grant you a free (untaxed) reimbursement for the extraterritorial costs that you incur. Your employer may also provide you with a maximum of 30% of your wage, including reimbursement, tax-free. For this reimbursement, it is not necessary to prove that extraterritorial expenses have actually been incurred.
When does the 30% ruling apply?
The 30% ruling applies to you if you were recruited or seconded outside of the Netherlands to work in the Netherlands. Starting 1 January 2012, the following conditions apply, if you want to make use of the 30% ruling:
- Your employer is required to withhold wage taxes from your income in the Netherlands;
- You have specific expertise that is not available in the Dutch employment market, or only rarely;
- For at least 16 months prior to your 1st day of work in the Netherlands, you have lived at a distance of over 150 kilometres from the Dutch border, calculated in a straight line.
If you want to make use of the 30% ruling, you can file a claim, together with your employer. This is done by using this form (only available in Dutch). If you have any questions, you can also call the Tax Information Line for Non-resident Tax Issues. Your employer should also be able to help you with this process.
The decision about your receipt of 30% ruling can be issued for a maximum term of 5 years.
Pay less tax if you receive partial non-resident taxpayer status
If you are eligible for the 30% ruling as an incoming employee, you can choose partial non-resident taxpayer status. If you receive partial non-resident taxpayer status, you are considered a non-resident taxpayer for part of the income tax. This means your taxable income from substantial interests (box 2) and your taxable income from savings and investments (box 3) will, for income tax purposes, be determined according to the regulations that apply to non-resident taxpayer status. In practice, this means that taxes on items in these boxes are levied based on a lower amount. As a result, you pay less tax.
Additional advantages: exchange any driving license
If you qualify for the 30% ruling, you and your family members can exchange any foreign driving license for a Dutch driving license. To apply for the exchange of your driving license under this rule, you will need to bring the following items to the municipal office desk for driving licences:
- Your valid foreign driving license
- Your passport and/or residency permit
- A copy of the approval of the tax authorities that the 30% tax ruling is applicable to you
- Certificate of fitness (verklaring van geschiktheid) which you can obtain via your doctor
- Passport photograph (in colour)