What is the Dutch 30% tax ruling for expats?

The 30% Rule – How a tax break could change the direction of thought.

By the rule of thumb, it’s safe to say that anyone would be excited about increasing their net pay without having to ask their boss for a pay rise or put in overtime! More fruits of their labour and less out of pocket…

If you’re coming up to a time in your career which have you screaming for a change or a shift in your direction of work, The Netherlands should be on your radar (particularly if you’re an indirect tax professional, with cities like Amsterdam and Rotterdam being key European hubs for indirect tax activity).

What’s so good about The Netherlands?

About a decade ago, the Dutch implemented what’s known as a ‘30% ruling’.  It’s a tax break for expat workers introduced to incentivise skilled foreign professionals to bring their experience to The Netherlands.

This lucrative tax advantage has navigated through numerous alterations since 2012. However, there’s still a massive financial benefit to moving to The Netherlands.

The 30% ruling is broken down…

Effectively, rather than your entire gross salary being subject to income tax, eligible skilled foreign workers will enjoy a 30% tax break. This means only 70% of your gross salary is subject to Dutch income tax.

But to enjoy such tax breaks, you need to be eligible.

How do you qualify for the Dutch 30% ruling?

As of January 2019, this is the current criteria:

• You have specific expertise that is either scarce or non-existent in the Netherlands.
• You’ll need to have more than 37,743 of taxable income.
• You have been recruited from abroad and have lived more than 150km from the Dutch border for more than 2 years.
• There is a written agreement of the 30% ruling for your particular situation.

To give you an idea of how the ruling would work, if you’re a foreign skilled worker on a 60,000 salary, only 37,743 of that would be taxable, and 22,257 would be tax-free. That’s an additional 775 a month extra in your back pocket! Perhaps this extra cash takes you a couple of steps closer to that holiday to Barbados you were looking to book 3 years ago. Realistically speaking, this tax break is to act as a reimbursement towards expenses that an ex-pat might incur in a move away from their home.

Taking the 30% ruling into consideration, being on 60,000 would be the equivalent of a Dutch worker being on roughly a 78,000 salary. Seems like a good deal to me!

Of course, several factors may come into play when looking to make big career moves. However, it’s always important to contemplate these options and be open-minded. I’ve advised this in my previous blog about ‘moving your cheese’.

Money should never be a deciding factor in taking on a job. I do know for a fact though that it does cross one’s mind when looking to make big career moves.

Have you checked out our fortnightly series of The Tax Expat? Be sure to check it out to hear about the experiences of our candidates and clients around the world.