The Dutch 30% ruling is a tax advantage for employees moving to the Netherlands for a specific employment role. When the necessary conditions are met, the employer can grant a tax free allowance equivalent to 30% of the gross salary subject to Dutch payroll tax.
Basis:
The legal basis can be found in article 31a, paragraph 2, under e Wet Loonbelasting 1964.
The 30% ruling is further explained in article 10e up to and including 10ej Uitvoeringsbesluit Loonbelasting 1965.
The employer and employee can file a joint request for the 30% ruling. It is only allowed to process the 30% ruling after approval of the Dutch tax authorities. The Dutch tax authorities will send a formal letter (in Dutch: beschikking) wherein the duration is reported.
A few general remarks:
1. The 30% ruling is linked to a Dutch employer. Only the Dutch employer mentioned on the granted 30% letter is allowed to process the 30% ruling in the payroll for the duration mentioned in the letter.
2. The maximum duration of the 30% ruling is 5 years. Previous stays in the Netherlands can be deducted from the maximum duration.
3. The period mentioned on the granted 30% ruling letter cannot be extended.
4. The minimum annual taxable salary level should be met for the duration of the 30% ruling. For 2020 the minimum salary level is EUR 38.347 (after 30% ruling calculation). This amount will change each year and every year the taxable salary should be at least this amount.
5. Theoretically 70% of the salary is taxed while the remaining 30% can be paid tax-free. This 70/30 ratio does not apply for taxable wages between EUR 38.347 and EUR 54.781, since a minimum of EUR 38.347 (for 2020) must be taxable wage after processing the 30% ruling in the payroll.
6. A reduced salary level (for 2020: 29.149 after 30% ruling calculation) could be applicable when you are younger than 30 and hold a master degree. Please be aware that, as soon as you become 30, the normal salary level needs to be met for the further duration of the 30% ruling.
Apply for the 30% ruling within 4 months after the start of your employment.
The application for the 30% ruling must be submitted with the Dutch tax authorities within 4 months after the start of your employment. If you do not submit your application within 4 months, the 30% ruling cannot be processed in your paryoll retroactively as from the start date of your employment. In that case, the 30% ruling will only be applicable as of the month following the date of submission of the 30% ruling application. Then the duration of the 30% ruling will be reduced by the period between the start date of the employment in the Netherlands and the issuance date of the 30% ruling by the Dutch tax authorities.