30% tax ruling in the Netherlands

30% tax ruling in the Netherlands

Foreigners who have been recruited from abroad for a job in Netherlands may be eligible for the 30% tax ruling.

From tax point of view, the salary fixed upon the employee and the employer will be reduced by 30 % and the employee should receive a 30 % tax reduction. This is the common way it is applied as it does not affect the salary burden for the employer.

Employees who are applying for the 30% ruling after 1 January 2019 will get benefits for 5 long years.

Basically the employer has to take care for applying for 30% ruling on behalf of his/her employee. This can be done by going to Dutch Tax Office.

The 30 % Ruling is an income tax advantage for all the migrants working in the Netherlands. The benefit they will get is 30 % of their salary is tax free. To gain benefits from 30 % ruling you has to meet the requirements are Minimum taxable salary at 70% 38.347 Euros For employee under 30 having master degree: Minimum Taxable salary at 70 % 29.149 Euros.

The 30 % ruling for Master’s Graduates: Rules are less strict for Master’s Graduates younger than 30 years:  The minimum salary requirement is €28,125 Taxable.  If the Graduation was completed in the Netherlands, the requirements for the foreigners do not have to be met if the candidate is hired within a year of completing his/her studies.

Explained with some examples below: If your salary is €40,000, then you qualify for the 30 % ruling. However, if your salary is reduced by 30 %, this means a new salary of €28,000 and a reimbursement of €12,000 – but then your salary would no longer qualify for the 30 % ruling. I n this case, the maximum advantage you could claim under the 30 % ruling would be a new salary of €37,000 and a reimbursement of €3,000. You still receive advantage of the 30 % ruling but not the full advantage.

Your salary is €53,000. Therefore, you qualify for the 30 % ruling. As a result, your salary could be split between base salaries of €37,100 and €15,900 as a reimbursement. Since the new salary is more than the minimum requirement, you can fully benefit from the 30% ruling.