30% Tax Ruling for Highly Skilled Migrants in the Netherlands

What is it

The 30% tax ruling, also known as the 30% facility or expat tax break, is a tax exemption that allows employers to compensate a portion of a highly skilled migrant's salary tax-free. This effectively reduces the employee's taxable income, resulting in a lower tax burden.

Unlocking the benefits of the 30% tax ruling in the Netherlands requires navigating the Dutch Tax Office's approval process. This involves applications from both the employee and employer.

Who qualifies

• Highly skilled migrants: You must possess specific expertise that is scarce or unique in the Dutch labor market.
• Recruited from abroad: You must be transferred or recruited from outside the Netherlands.
• Employer agreement: Your employer must be registered with the Dutch tax office and agree to apply the 30% ruling on your behalf.

How does it work

Up to 30% of your annual gross salary can be designated as a tax-free allowance (capped at €69,900 for employees hired after January 1st, 2023). This allowance helps offset the additional costs associated with relocating to a new country, such as housing, travel, and settling in. It's important to note that the 30% tax-free benefit applies only to a portion of your salary, not the entire amount. The remaining portion is taxed according to regular Dutch income tax rates.

Important changes as of January 1st, 2024

• The 30% tax-free allowance previously applied to the entire term of the ruling. Now, it's limited to a maximum of:
  • 30% for the first 20 months of the ruling period.
  • 20% for the following 20 months
  • 10% for the last 20 months (total maximum duration remains 5 years)
• There's a cap on the total salary eligible for the 30% tax-free benefit: €233,000 per year for employees hired after January 1st, 2023.

Benefits

• Lower tax burden for the highly skilled migrant.
• Makes relocating to the Netherlands more financially attractive.
• Helps employers attract and retain top talent from abroad.

Things to Consider

• The 30% tax ruling is not a guaranteed right, and employers must apply for it on your behalf.
• You need to meet the eligibility criteria and provide supporting documentation.
• The ruling has a maximum duration of 5 years.

Resources

For the most up-to-date information, keep these resources handy:

- Dutch Tax Authority
- Dutch Government

By understanding the 30% tax ruling and its recent changes, you can make informed decisions about relocating to the Netherlands for work opportunities.