The 30% ruling for employers

Payingit offers full payroll services, including the filing of applications for expat employees who qualify for the 30% ruling.

What is the 30% ruling?

The 30% ruling is a Dutch tax facility aimed at attracting employees with specific skills or expertise to the Netherlands, subject to certain conditions. It is a complex topic, but we make it as easy as possible for our clients.

Why is it a benefit for employers and companies?

Attract talent: You want a great workforce, and you need to attract the best talent and expertise. Global competition is stiff for certain skills. Tax-free allowances are a plus.

 

Low administrative expense: You can offer a real benefit to potential employees by compensating them for extra expenses they have when they move out of their home country to work—without heavy administrative procedures for you. It’s a win-win. Some of those expenses can be free of tax for them. See below for examples of extraterritorial expenses.

What does it mean for you as an employer?

It is the most straightforward approach for you. Generally speaking, employers choose to apply the 30% ruling because it is efficient and straightforward.  You can choose another way—you can reimburse the actual expenses—but that involves considerable administration of receipts and reporting—which is costly. The most straightforward approach is to apply the 30% ruling.

Who qualifies for the benefit?

Employees and contractors hired from abroad or sent to work for an employer in the Netherlands (conditions apply):

1. Who have specific expertise that is not readily available in the Dutch labor:

  • In order to determine whether the employee has specific expertise, the Dutch tax authority looks at three factors:
  • The education level of the employee;
  • Relevant work experience (two and half years in a similar role is considered sufficient);
  • Does the salary meet the 30% ruling norm and does it indicate specific professional expertise

 

2. Who have been living at least 150 kilometers from the Dutch border for two thirds of a 24-month period prior to starting a job in the Netherlands;

3.Who are paid through a Dutch payroll, and whose salary is subject to Dutch withholding tax.

 

What kinds of expenses qualify (known as extraterritorial expenses)?

Employees going abroad to work (temporarily) have special expenses, i.e., expenses they would not have if they worked and lived in their own country. Hirers frequently provide things like:

  • Cost Of Living Allowance (COLA)
  • House-hunting / acquaintance trip expenses
  • Double housing costs – maintaining a home in their country
  • Extra housing costs
  • Travel for home leave
  • Cost of visas, permits, host country income tax return
  • Lessons to learn Dutch!

 

You as the employer can decide to reimburse other expenses too, such as housing or health insurance. But these are considered taxable wages. An important benefit!  International school fees are a big issue for global talent with children, and they can be reimbursed tax free on top of the 30% ruling.

What do I need to know to administer this ruling?

File within four months to have the ruling apply from the first month (See Small Print below).You and the employee have to have received a ruling letter from the Dutch tax authority before you can apply the ruling. There is a maximum:  you as the employer can reimburse a maximum of 30% of the wage, including the allowance, free of tax. It can be applied to contractors too. There is a minimum salary/wage level that must be met – this level is adjusted yearly. If the employee’s salary falls below the level, they lose the benefit. There are different salary levels by age: over 30 or under 30. Check the current salary norm here.

 

Employees can take the 30% ruling with them if they leave your employ. It can be applied for a maximum period of 8 years (96 months) generally speaking.

The Basics –summary of important points for employees

Please check out the full story at The 30 % Ruling for Employees:

  1. The ruling is good for eight years (96 months). This period could be shorter if you have worked in the Netherlands before, or by any time previously spent in the Netherlands.
  1. You must continue to meet the salary norm. If the taxable wage is lower than this norm, the 30% ruling can no longer be applied—and no, you can’t get it back Please read our 30% Ruling for Employees page carefully!
  1. The 30% ruling is portable, provided the period between jobs does not exceed three months. If you change employers (join a new company), notification needs to be sent to the tax authority. Payingit takes care of this for our clients.

SMALL PRINT

File the application within four months of starting employment. If the application is filed more than four months after the start of Dutch employment, the full benefit is not available. The 30% ruling is granted as of the month following the month in which the request for the 30% ruling was filed.

 

Both you the employer and your employee have to have the official ruling letter from the Dutch tax authority in your hand. Hang on to it! Again, it’s only valid for eight years and the salary level is critical.

How does the application process work?

Good news! Payingit handles the application process on behalf of our clients. It is a process that takes time, and the application should be filed within the first four months on the job.

What is the fee for the application process?

We charge a fee for the application process, which we will discuss with you in advance. We usually do not charge for consulting hours with you or your employee.