What is the 30% ruling?
Employees who are being sent to another country to work, or who are coming from abroad to work in The Netherlands, are called extra-territorial employees. If these employees satisfy certain conditions, they are subject to a special compensation ruling: the 30% ruling.
The 30% ruling facilitates the recruitment of employees from abroad. If an employee incurs costs by carrying out his employment, then certain costs are reimbursed tax-free.
If the 30% ruling is applicable, 30% of the employee’s salary is exempt from tax (PAYE and income tax).
When does the 30% ruling apply?
How does the 30% ruling work?
For the 30% ruling to be applicable, a request has to be submitted to the Tax Authorities (Inland Revenue). This request must satisfy certain conditions and copies of the following documents need to be included:
- the employment contract;
- work permit;
- curriculum vitae; and
- statement from the employer with regard to the skills and labour market scarcity of the employee.
We can submit a request for application of the 30% ruling on your behalf. If you need more information, you are welcome to contact us. If the request for application of the 30% ruling is submitted within 4 months after commencement of employment, the ruling will be applied retroactively until the start of employment.
If the request is submitted more than 4 months after commencement of employment, the 30% ruling will be applied from the month following the month the request was submitted.