Having a rough idea about Dutch Tax Ruling in the Netherlands may not be very beneficial to you. Nobody wants to be relying on shallow knowledge and having in-depth knowledge about the Dutch Tax Ruling in the Netherlands will do wonders for you. So let’s get all the knowledge we have!!
Here’s How the Dutch Tax Ruling in the Netherlands work?
The most common way to apply the Dutch Tax Ruling in the Netherlands is for the employee to agree to a salary reduction of 30%. They still receive this percentage from their employer, but as a reimbursement of expenses, which is then not subject to income tax.
However, the employee must still meet the minimum salary requirements after the 30% reduction. This can include non-cash advantages such as holiday allowance, company car, and other benefits.
For example, your salary is €30,000; reducing it by 30% brings it down to €21,000. This would take it below the minimum threshold. You would therefore only be able to accept a reimbursement that brings your salary down to the threshold (which is currently €1,653 on a €30,000 salary). You would still benefit from the 30% ruling, but not for the full amount.
But if, for example, your salary is €55,000, this could be split between a €38,500 base salary and €16,500 as a reimbursement, because your reduced salary is above the current threshold. This means that you can enjoy the full benefit of the 30% ruling.
Bear in mind that the employer has no obligation to pass on the advantage of the 30% rule to the employee. In practice, it is possible for the employer to partially or fully pocket the benefit. This usually only happens when employees are unaware of the 30% ruling benefits.
Discuss this issue with any potential employers before taking up the post. In addition, it’s probably a good idea to hire the services of an accountant or tax advisor.
Dutch 30 Percent Ruling Requirement
Before you apply for Dutch Tax Ruling in the Netherlands, make sure you are eligible for it. Here are the main requirements:
- You are an employee of a company in the Netherlands.
- You have specific professional expertise that is scarce or not available in the Netherlands. Highly skilled migrants are deemed to have such expertise when their income meets the above salary requirements.
- You and your employer agree in writing that the 30% ruling applies to your situation.
- You have been recruited or transferred from abroad (and you have lived more than 150 km from the Dutch border for more than 24 months prior to working in the Netherlands.)
Note that all the above factors are considered in relation to each other and that the minimum taxable salary changes annually. And after marking the above check points you are good to go for enjoying the benefits of Dutch 30% Ruling.
Apply for the 30 Percent Ruling
The application for the ruling in the Netherlands needs to be made jointly by both employer and employee. You can do this by completing the application form or calling the tax information line for an information pack.
You will need to provide the Dutch tax office with copies of:
- passport or valid photo ID
- a Dutch employment contract or a letter from your employer confirming that they offered you the position
- your BSN number, if you have it
- Dutch residence and Dutch work permits
- details of your Dutch address
- proof of residence in another country before the hiring process began
- company details including company tax number
- written agreement clearly stating that both parties have consented to the application for the ruling
Lowering your taxable income will most likely have implications for your potential pension, as well as unemployment or disability benefits, since these benefits are based on your taxable salary. This is one of the reasons why both employer and employee must complete the application for the 30% ruling, and that an agreement in writing is necessary. More importantly, it is also why consulting a tax advisor is probably wise and best.