The 30% Tax Rule for Expats is a scheme that offers highly educated Expats to get a discount on their income Tax up to 30%. It basically means less tax while you are working in the Netherlands. The goal of the Dutch Government with the 30% Tax relief for Expats is to attract talent to the Netherlands, as there is always a need for in the Netherlands, especially with recent tech companies opening headquarters in the Netherlands like, Netflix, Uber, Booking and many more.

How can I apply for the Dutch 30% Tax rule?

First of all you have to meet certain conditions to be eligible to apply for the Dutch 30% Tax ruling. Here you can find them:

  1. The person needs to move to the Netherlands and therefore be transferred or headhunted from abroad.
  2. The Employer and the Employee have to agree that the ruling will be in place and is applicable. It also has to be in writing.
  3. The Employee needs to be registered at the Dutch Tax Office and also be listed on the Dutch Payroll tax by the Employer.
  4. The Employee did not reside within 150km from the Dutch border for the last 18 out of 24 months at the time of hiring.
  5. The salary of the Employee has to be at least €38.347,- per year to meet the 2020 threshold.
  6. The employer has to show that the Expertise of the job is scarce in the Netherlands.
  7. A Dutch Bank account 🙂

The employee is not allowed to be self-employed, but if you are starting a business there are certain conditions to still apply for the 30% Tax Rule.

For PhD and Master’s graduates, it is possible to apply for the 30% rule, but it requires some additional or lighter conditions:

  1. The employee needs to have expertise that is scarcely available in the Netherlands.
  2. The Student has to be younger than 30 years.
  3. The minimal salary threshold is €29.149,-
  4. If the PhD Student completed the study in the Netherlands, the ‘recruited abroad’ condition is lifted.

How does the 30% ruling in the Netherlands work?

For every company this will work differently, but in general practice you mostly see that the employee is agreeing with a salary reduction of 30%. You will obviously still receive this, but mostly likely in a different form. For example, in the form of reimbursements of expenses. Don’t forget that the 30% reduction still has to meet the minimum salary requirements to apply for the 30% rule.

Other benefits for the 30% Tax Rule

The 30% ruling has benefits besides the tax-free salary part. We highlighted the two most important once that could benefit you:

  1. Partial non-resident status

A Dutch tax resident with the 30% ruling can choose to be treated by the Belastingdienst as a partial non-resident taxpayer of the Netherlands. This means that you will be considered as a non-resident taxpayer in Box 2 and 3. For Box 1 income you will still be considered as a resident taxpayer. So, in that case, you don’t have to pay income tax on assets in Box 2 and 3 (besides real estate located in the Netherlands and substantial shareholding in a Dutch BV) when you file the annual income tax return.

  1. Exchange of foreign driver’s license

Another great benefit of the 30% ruling is the possibility to exchange your foreign driver’s license. In most cases, you have to redo your driver’s license test in order to obtain a Dutch driver’s license. If you have the 30% ruling. It is possible to exchange your foreign driver’s licence for a Dutch license without redoing the test. And even all of your family members at the same address as the holder of the 30% ruling don’t have to redo the test.

Things to keep in mind when applying for the 30% Rule in the Netherlands

  • You will save less for your pension. The 30% rule doesn’t make any extra or the same savings to the general pension where every Dutch Tax payer is enrolled.
  • You will not have the same amount to the mandatory Holiday Allowance that every employer is required to pay around June. This also counts to your end-year bonus that will probably also be lower.
  • Keep in mind that the Dutch 30% Tax Rule has been shortened from 8 years to 5 years since January 2019. With recent Government plans coming up it doesn’t seem like this will change any time soon.
  • If you already visited or studied in the Netherlands before (but still are hired from abroad) in the 25 years prior to the hiring it will be conducted from the 5 years you are eligible to receive the 30% Rul Dutch tax relief.