In today’s video, we’ll be looking at one of the main benefits of traveling to the Netherlands for work. The Dutch government offers opportunities for foreign professionals to get paid in order to move, live, and work in the Netherlands, and one of the ways they achieve this is by offering attractive tax incentives, popularly known as the 30% ruling. So stick around and read the blog to the end as we go into all the details.
Here’s what we are covering in this video.
- Who is a highly skilled migrant?
- What is 30% ruling?
- What are the conditions for 30% ruling application process and the approval process, the validity of the 30% ruling, and finally,
- The impact of changing a job on your 30% ruling?
Let’s get right into it.
A Highly Skilled Migrant
is someone with specialized knowledge, skill, or experience hired from outside of the Netherlands to work for a company in the Netherlands. To qualify as a highly skilled migrant, there are certain conditions you must meet.
- One is that you must hold a valid work visa and a resident permit.
- Two, you work for an employer who is a recognized visa sponsor.
- Three, you meet the salary criteria set by the Dutch government. As of this moment, the salary criterion for anyone below the age of 30 as a highly skewed migrant is 3,672 euros.
- And for those above the age of 30, the salary criterion is 5,008 euros per month.
It’s important to know that this salary criterion does not apply to people in academic research. So PhDs and doctors in training do not fall under this salary criterion on my channel, there are many blogs and videos about finding a job as a highly skilled migrant. I will leave the link to some of those videos and blogs in the description notes. Be sure to watch them after this video and read the content so that you can see the opportunities that are out there for you to come work and live in the Netherlands.
What is 30% Ruling?
When you get a job to come and work in the Netherlands, from your home country, or from anywhere outside of the Netherlands, you are likely going to incur extra costs. Also, chances are that the cost of living in the Netherlands is higher than the cost of living in your home country. In order to compensate for this extra cost, the Dutch government allows employers to pay you 30% of your gross income tax-free. So if you qualify for the 30% ruling, it means that 30% of your income will not be taxed for a maximum of five years.
To get an idea of how this impacts your salary, let’s say your annual income is 65,000. With 30% ruling, your annual tax will only be 10,744. If you do not have the 30% ruling, your annual tax bill will be in the region of 20,500 euros. So you can see that with a 30% ruling, you save thousands of euros in tax expenses. And this is one of the reasons that people are attracted to work in the Netherlands.
Get Reimbursement for Extraterritorial Costs
Another benefit of the 30% ruling is that you’re able to get reimbursement for extraterritorial costs that you incur in moving to the Netherlands. Costs, such as storage costs, traveling costs, processing your documentation, things like translation of your documents, language, school, and all incidental expenses that relate to coming to the Netherlands to work. You can also be reimbursed for this course tax-free. This has to be agreed in advance with your employer there.
Change of Driving License
Another benefit for those who benefit from the 30% ruling, is that you can easily exchange your driving license for a Dutch driving license. Many countries are not allowed to use their driver’s licenses in the Netherlands. After six months of arriving in the Netherlands. Go through the Dutch driving school and get a driving license issued. This can cost as much as 800 euros to 5,000 euros depending on how many times you attempt the exams and how long it takes you to pass the exams. That is one huge benefit again, of the 30% ruling.
Lastly, you have also the possibility of putting your children in special international schools that are meant for experts. Your employer can also reimburse you the cost of this education tax-free.
Conditions for Benefiting from 30% Ruling
So what are the conditions for benefiting from this 30% ruling? Certain conditions apply.
- Number one is that you are in paid employment.
- Number two, your employer is an approved Visa sponsor.
- You have specialized knowledge that is scarce or hard to find In the Netherlands.
- You are recruited from outside of the Netherlands, at least not anywhere near 150 kilometers from the Netherlands.
- Your 30% ruling has been discussed and agreed upon in writing with your employer.
- Another condition is that you must meet the salary criteria, which I mentioned earlier in the video.
- And lastly, you have to apply and receive a valid decision from the tax authority.
Only then can you enjoy the benefits of the 30% ruling application and approval for the 30% ruling your employer would have to apply for the 30% ruling on your behalf application has to be made within four months of starting your new job. And the Dutch tax authority promises to make a decision within eight weeks. So if the decision is made in your favor, your employer is going to pay you arrears from the time you started working. The 30% ruling is valid for a maximum of five years.
If you get approval for it, you can enjoy this benefit for a maximum of five years. In the past, it was for eight years, but it’s been reduced now to a maximum of five years. Five years is still a lot of years for you to make savings. If you save 10,000 every year, that is 50,000 savings in tax bills. That is very, very reasonable and attractive to a lot of people.
The impact of changing a job on your 30% ruling?
Lastly, we look at what happens if you have a change of job during these five years. Well, if you change job during these five years you are under the 30% ruling. If you still meet all other criteria of a highly skilled migrant, then your 30% ruling can be carried forward to your new employer. However, you have to discuss again with this new employer if they accept to carry out this 30% ruling on your behalf. An agreement with the employer upfront is very important to ensure that you don’t lose out on this benefit.
Don’t assume that everybody is doing it, not everybody’s doing it. Some employers know how to do it, and have been doing it because they recruit a lot of expatriates. However, some other employers don’t really have all the expertise or are not willing to do the administrative work. So you really want to ensure that you have this discussion in advance to know whether or not this job you are taking will qualify for the 30% ruling. If that is the case, you are expected to notify the tax office within four months of starting the new job.
Take Advantage of the 30% Rule
So taking advantage of the 30% ruling can significantly contribute to your savings and fast-track your wealth-building ability in the Netherlands. As a highly skilled migrant, not everyone qualifies for this benefit. You want to make sure that you discuss this with your employer and be sure that this benefit is applicable to you at the time of signing your contract. And if it doesn’t apply to your job, that is also fine. As long as you find a job that you like that will bring you to the Netherlands to live and work legitimately.
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