12 februari 2024

30% Tax Rule in the Netherlands

Written by: Sophie

Strategic Business Consultant

Moving to another country for your job is time-, energy- and money-consuming. And even when you’re there, there are taxes to handle and still some extraterritorial costs to be made. As you might know, the Netherlands has a complicated tax system, which can make it hard to navigate.

But good news! The Netherlands has tax benefit rules that can apply to you or your employees. One of them is the 30% tax rule, which grants a substantial reduction in taxable income. An Employer of Record (also known as umbrella company) is there to help and guide you through this process. With the help of our native employees, we will take all the paperwork and hassle out of your hands and you will receive a higher net income.

What is the 30% ruling?

Basically, the 30% tax rule in the Netherlands is tax-advantaged for highly skilled migrants, who move here for a specific employment role, intended as compensation for extra costs. This rule means that an employer has the possibility to grant 30% of the salary tax-free. The application of the 30% rule, also called the 30% facility or 30% reimbursement ruling, will result in a higher net income. These costs do not have to be explained or verified to the employer to receive the tax advantage.

Requirements for 30% ruling

To be able to claim the 30% ruling, you’ll have to meet the following conditions:

You have to be in paid employment under a contract
You were recruited outside of the Netherlands or you have been sent to the Dutch branch of your company from another country
You possess specific expertise, preferably one that is hard or not even found in the Dutch labor market
You lived for more than 16 months outside of the Netherlands, more than 150 km from the Dutch border in the two years before your first working day in the Netherlands
Your taxable wage must be over €46.107 on an annual basis in 2024
If you have a master’s degree and are younger than 30, your taxable salary must be more than €35.048 on an annual basis in 2024

Update since 2024: Phasing out to 30/20/10%

For applications submitted in 2024, the 5-year term is divided into three blocks of 20 months each. In the first block, the standard 30% benefit is allowed, with employees receiving a tax-free compensation of 30% of their salary. In the second block, this benefit reduces to 20%, and in the final block, it further decreases to just 10%. So, initially, eligible employees receive 30% of their salary tax-free for the first 20 months of their employment in the Netherlands, followed by 20% tax-free for the next 20 months, and finally, only 10% tax-free for the last 20 months.

How do you apply for the 30% tax rule?

It’s easy! Simply fill in the application together with your employer at belastingdienst.nl and submit it. You will then receive a reply from them within 10 weeks. They recommend that you contact your employer before submitting your application to ensure they are willing to take part in the 30% tax ruling. In case they are not willing to take part or think it is too complicated, Dutch Employer of Record can assist and make it happen. Find out here how you can apply for 30% tax rule if your employer can’t.

Cover extraterritorial costs when moving to the Netherlands

The 30% tax reduction rule in the Netherlands is meant to alleviate some of the financial stress or grapple of moving to this beautiful country. Thanks to the 30% facility you can have some extra spending room for (unexpected) extraterritorial costs. Are you wondering what these extraterritorial costs might be? We have got you covered with this summary:

Extra costs of living, due to differences in prices for housing, meals, gas, water and electricity
Fees to apply for or convert official personal papers, like for instance driver’s licenses or visas
Costs to get familiar with the Netherlands, such as trips to look for housing or schools for your kids
Vaccinations or medical examinations to stay here
Initial costs for housing or even double costs if you keep your home in your home country
Storage for your household effects, travel costs to your home country for family visits, training costs to learn the Dutch language or costs to apply for a social security exemption

Fun facts of the 30% tax ruling in the Netherlands

You can benefit from the 30% ruling for a maximum of five years
There is the possibility to honor the 30% ruling for part-time employment
Next to the 30% ruling, schooling fees for children from employees can be issued as free reimbursement under special conditions
Under the 30% ruling a foreign drivers license can be swapped with a Dutch driver’s license for employees and their families
Dutch Employer of Record can help you navigate all the administrative difficulties and make all the above come true for your employees

Employer of Record can help you

We hope that this article was helpful in explaining what the 30% tax rule is, what the requirements are and how you can apply. If you have any further questions, please feel free to reach out to Employer of Record the Netherlands. Do you want to apply for the 30% tax rule through Dutch Employer of Record? Apply here.

Written by:

Sophie | Strategic Business Consultant

As a strategic business consultant based in the Netherlands, she supports international businesses in successfully expanding their operations across the Dutch market. With her expertise in market entry strategies and business development, she helps companies navigate the unique challenges of establishing a foothold in the Netherlands. Her keen insight into local business practices and regulations makes her a trusted partner for HR managers and business development teams. Outside of work, she enjoys spending time with her family, exploring the Dutch countryside, or relaxing with a good book by the canals in Utrecht.

Questions? Questions?

28 november 2024