When moving to The Netherlands, one of the most pressing questions people might have is: “How much tax am I going to pay in the Netherlands?”. The Dutch tax system is progressive, which means that it imposes a higher rate on the wealthy than on the poor. With an average of 37%, the Dutch tax burden is pretty high. In return, the Dutch get an efficient working government, great infrastructure and excellent social security.
As an expat, you will have to pay the same taxes as the Dutch. The good news is, that you might be eligible for an 30% tax-cut on your income, also known as the 30% ruling.
What is the 30% ruling?
The 30% ruling is a tax incentive, available to employees who are recruited from outside the Netherlands to work here temporarily. If they meet the conditions set by the government, they are exempt from paying tax on up to 30% of their salary. The 30% allowance helps to cover the extra costs of working outside their country of origin, the so-called extraterritorial expenses, such as travel costs, accommodation costs and the cost of living.
When can you apply for the 30% ruling?
There are certain requirements you need to meet in order to qualify:
- You were recruited or transferred from abroad to work in the Netherlands
- Your minimum salary is € 37.743 (2019) or:
- you are under 30 years old and you have obtained a master’s degree.(and your minimum salary is € 28.690)
- you are conducting scientific research at a research institution. (In which case, no salary requirements apply. )
- You have lived at least 150 kilometres from the Dutch border during more than 16 months of the 24 months prior to your first day of work in the Netherlands.
- You work for an employer that is registered with the Dutch tax office and pays payroll tax.
- Both you and your employer have contractually agreed to implement the 30% ruling.
What is the maximum duration of the 30 % ruling?
As of January 1, 2019, The Dutch government has shortened the duration of the 30% facility from 8 to 5 years. Employees who arrive in the Netherlands in or after 2019 will now be able to apply the tax break for up to 5 years. If you have been living and working in the Netherlands previously, this period will be deducted from the maximum term, unless this period ended more than 25 years ago.
Depending on the case, the processing period may last from one to six months. If you want to make use of the facility from your first working day, you need to make sure the Dutch Tax Office (Belastingdienst) receives the application within 4 months of that date.
If the request is made later, the decision shall apply starting the first day of the month following the month in which the request is made.
Should you apply for the 30% ruling?
If you meet the requirements it’s always advisable to apply for the 30% ruling. It is a serious benefit which saves you a lot of taxes in the coming years as an expat in the Netherlands. One important thing to take into account is that you won’t be building up pension rights on the 30%.
How can you apply for the 30% ruling?
If you would like to apply for the 30% ruling, you can file an application, together with your employer, using the form Application Income tax and national insurance 30% facility 2019. Should you need help, you can call the Tax Information Line for Non-resident Tax Issues.
If the ruling is denied, and you feel you met with all the requirements, you might have provided insufficient information on the application. If this is the case, you can appeal and provide the Dutch tax office with additional information.