• 05 December 2018
  • Recruitment Room

What is the Dutch 30% tax ruling for expats?

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

By 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 the overtime! More fruits of their labour and less out of pocket…

If you’re coming up to a time in your career which has you screaming for a change or a shift in your direction of work, then 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’. In plain words, it’s a tax break for expat workers which was introduced to incentivise skilled foreign professionals to bring their experience to The Netherlands.

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

The 30% ruling broken down...

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

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

How do you qualify for the Dutch 30% ruling?

As of December 2018, this is the current criteria:

  • You have a specific expertise that is either scarce or non existent in the Netherlands

  • You’ll need to earn a minimum income of €37,296

  • 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 foreign skilled worker on a €50,000 salary, only €37,296 of that would be taxable, and €12,704 would be tax free. That’s an additional €520 a month extra in your back pocket! Perhaps this extra cash takes you a couple steps closer to that holiday to Barbados you were looking to book 3 years ago… But realistically speaking, this tax break is to act as a reimbursement towards expenses that an expat might incur in a move away from their home.

Taking the 30% ruling into consideration, being on €50,000 would be the equivalent of a Dutch worker being on roughly a €63,000 salary. Seems like a good deal to me!

Of course there are a number of factors that may come into play when looking to make big career moves, however it’s always important to contemplate these options and be open minded (as I’m advising in a future blog about ‘moving your cheese’).

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

 

For more information on taking your tax career to The Netherlands, please contact Josh Rapaport.

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