Information for employer, 30% ruling
As an employer, you may pay an employee who is eligible for the 30% ruling up to 30% of his or her gross salary free of tax. The tax-free reimbursement classifies as a free allowance for extraterritorial expenses. These expenses do not need to be specified. No record-keeping is required. The 30% ruling facility can only be applied to an employee for which the employer has received written approval from the Dutch tax office. The taxable salary of an employee should always meet the minimum income level set for that particular year. See under Income norm for the 30% ruling.
Applying for the 30% ruling status
The 30 percent ruling may only be applied for by the employer after it has received a written confirmation to do so. To obtain the 30 percent ruling, the employer and the employee, have to make a joined filing for the 30% ruling.
Please note that the signing date on the employment contract should be set before the arrival date of the employee. The maximum validity of the 30 percent ruling is 5 years as per 2019. This duration may be reduced if the employee resided in the Netherlands in the past 25 years. If you received your 30 percent ruling before 1 January 2019, a transition period may apply. See under Transition period 30% ruling.
Need help applying for the 30% ruling? We are happy to preparing the 30% ruling filing for you and your employee. Contact us for more information.
Extraterritorial costs 30% facility
An employee enjoys a number of benefits from the 30 percent ruling next to the tax-free reimbursement of extraterritorial costs. These benefits are:
- Tax-free reimbursement need to be specified (no need to keep an administration for it).
- 30% of the gross salary can be paid out free of tax, provided that the employee pays tax over the annual set minimum salary amounts (see under income requirements 30% ruling).
- The employee may choose to have his or her (box 3) asset taxation not applied for in the Netherlands (i.e. no taxation of wealth tax or box 3 tax).
- The partner of the employee enjoys the same tax exemption in box 3 as employee.
- As a 30% ruling holder, a Dutch driver's license can simply be obtained by presenting one's home country driver's license.
The following expenses are part of the defined extraterritorial costs of the 30% ruling:
- Off-setting the cost of living in the Netherlands.
- Cost of living components include among others meals, gas, water and electricity.
- Expenses related to visiting the Netherlands to familiarize oneself the Netherlands and its culture, including family members who may need look for housing, a school or childcare.
- Expenses to convert official personal documents, such as residency permits, visas and driver’s licences are part of the extraterritorial costs.
- Expenses for medical examination and vaccinations for the stay in the Netherlands.
- Duplicate expenses to maintain one's house in his or her home country.
- Hotel and restaurant costs.
- Expenses for moving and storage.
- Traveling expenses to visit family, friends and reunions.
- Extra expenses for tax advice.
- Education expenses for yourself and your family member related to your stay in the Netherlands.
Not qualifying as extraterritorial expenses
The 30% ruling knows a number of specific expenses that do not qualify as extraterritorial costs. These costs cannot be reimbursed free of tax:
- Secondment allowances
- Bonuses and comparable allowances
- Capital losses
- Financial expenses for buying property (such as mortgage expenses and broker's fee)
- Offsetting the costs of a higher tax rate in the working country (tax equalization)
Tax-free reimbursements in addition to the 30% facility
In addition to the 30 percent facility, the school fees for an international school or for the international department of an ordinary school can be reimbursed free of tax.
This is permitted if:
- the curriculum at the school (department) is based on a foreign system
- the school (department) is in principle only open to children of seconded employees
The following costs, among others, may also be reimbursed free of tax:
- removal costs and the costs of the temporary storage and transfer of the household effects
- costs of a familiarization visit by the employee to the business in the country of work
- costs of the application for or conversion of a work permit or a highly skilled migrant permit
- commuting expenses (expenses for (regular) commuting)
- telephone line rental costs
- costs of business meals
30% ruling and insurance contributions
The 30% ruling also applies to the employee insurance contributions. If your employee is insured in the Netherlands under the employee insurance schemes, you are not required to deduct employee insurance contributions from the amount of the 30% tax-free allowance.
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