The 30% ruling was set up specifically to attract highly educated and skilled employees to the Netherlands by allowing a tax incentive from the high taxation levels in the Netherlands. The 30% ruling is therefore only awarded to employees who meet these criteria. The 30% ruling is only granted upon application and each application is reviewed individually before been granted. The 30% ruling is only granted to taxpayers who are employed during their stay in The Netherlands. Consequently, self-employed taxpayers or taxpayers are not eligible for the 30% ruling.
If you are granted the 30% ruling, up to 30% of your compensation package will be considered as a tax free expense reimbursement for living in the Netherlands. This is also known as a reimbursement for extra territorial expenses. In addition, taxpayers with the 30% ruling can also opt for the Partial Non-resident status.
Based on new legislation, the 30% ruling is only granted to you for the first 8 years of your stay in the Netherlands. Periods of stay in the Netherlands in the preceding 25 years prior to your arrival are rounded up to whole months and are then deducted from this 8 year period. So a weekend visit to Amsterdam 6 years ago will be rounded to a whole month and deducted from the 8 year period.
Technical requirements that need to be met to qualify for the 30%-ruling are:
You were living outside the Netherlands before being transferred to the Netherlands or recruited by a Dutch employer*
Your employer is registered with the Dutch tax authorities and your salary is liable to Dutch wage tax
Both you and your employer must contractually agree to implement the 30% ruling. For reference purposes, the 30% is the maximum allowed percentage. However, you and your employer should also agree on a lower percentage to meet the minimum income level of requirement 4
You have specific experience or expertise that is not or is rarely available in the Netherlands. In order to establish if someone has specific experience or expertise, a minimum salary level requirement was established:
for 2013 you must earn at least EUR 35,770 per annum (after deduction of the 30% tax free part);
if you are below 30 years old, the minimum earnings per annum are lowered to EUR 27,190, but you must have a master's degree as an extra requirement;
if you work in scientific research you don't have to meet minimum salary level requirements
In the 24 months prior to your employment in the Netherlands, you must have lived more than 150 kilometers from the Dutch border for more than 16 months.
This requirement is not applicable for an employee who worked in the Netherlands and has returned to work in the Netherlands. If this is the case, the first period of employment in the Netherlands must not be more than 8 years or there will be a full deduction for prior stay. Also, the employee must have lived more than 150 kilometers from the Dutch border prior to his first employment in the Netherlands.
* Please note, different rules and requirements may apply to people who have obtained a PhD degree in the Netherlands and consecutively started working in the Netherlands within a year of obtaining their PhD degree.
OnestopTaxPrep has over 18 years of specialization in providing combined Dutch and U.S. tax preparation and consulting services. This specialization has assisted U.S. nationals living and / or working in The Netherlands and Dutch nationals living in the U.S.A.