The 30% ruling in the Netherlands, designed to welcome and assist international entrepreneurs and skilled professionals, has long been a key attraction for individuals seeking to contribute their expertise to the Dutch economy. However, it’s essential to note that recent developments in government policy indicate a shift in the implementation of this scheme.
The 30% ruling is a highly advantageous tax incentive in the Netherlands. It is specifically designed to attract and support international entrepreneurs and skilled professionals. This special arrangement aims to make the Netherlands an even more appealing destination for those coming from abroad to establish businesses, invest, and contribute their expertise to the Dutch economy. Under certain well-defined conditions, individuals who meet the criteria can benefit from tax benefits. This allows them to receive up to 30% of their salary tax-free. This aims to help them manage the additional expenses associated with working in a foreign country.
This initiative acknowledges the value that international entrepreneurs and professionals bring to the Dutch labor market. This offers them financial incentives to ease their transition into the local business landscape. The 30% ruling not only promotes economic growth and innovation but also helps maintain a diverse and skilled workforce in the Netherlands.
To harness the advantages of this scheme, individuals must meet specific requirements, including being employed by a Dutch company. Another requirement is to poses expertise that is in high demand and challenging to find within the Dutch labor market. Furthermore, these individuals should have been recruited from abroad to work in the Netherlands. The last requierement for the 30% rule is to have obtained official approval from the Dutch Tax and Customs Administration (Belastingdienst).
In determining eligibility, the individual’s expertise is often gauged by their salary. Which in 2023 should amount to at least €41,954. For employees under 30 with a scientific degree it is at least €31,891. These figures are calculated before accounting for tax-free allowances. In cases where certain industries consistently offer higher salaries, it is imperative to demonstrate the scarcity of the individual’s expertise within the local job market.
This scheme recognizes that not all cases are the same. there are exceptions for employees who have resided more than 150 kilometers beyond the Dutch border for at least 16 of the 24 months preceding their first working day in the Netherlands. To avail of the 30% ruling, employers must formally request approval from the Dutch Tax and Customs Administration, which outlines the maximum duration for applying this tax benefit.
Changes in 2024
Starting from January 1, 2024, there will be an upper limit to the salary on which the 30% ruling can be applied, capped at €233,000. This ensures that the scheme continues to attract and support skilled international entrepreneurs and professionals while maintaining fiscal responsibility.
Starting from January 1, 2024, the tax-free allowance of 30% will only apply in the initial 20 months. In the subsequent 20 months, the maximum untaxed allowance reduces to 20% of the salary. During the final 20 months, this percentage further decreases to 10%. The same rules apply for a 30% ruling with a duration less than five years.
An approved amendment includes a transitional arrangement for employees who received a 30% ruling allowance in the last period of 2023. This reduction doesn’t affect employees benefiting from the 30% ruling before January 1, 2024. However, if an employee is considered an incoming employee again after a break, this transitional arrangement no longer applies.
The third proposal states that from January 1, 2025, employees using the 30% tax benefit scheme can no longer choose to pay a part of their taxes abroad.
When it comes to the 30% rule, enlisting the expertise of an advisor of AXP Advisors is a smart move. A qualified advisor possesses in-depth knowledge of tax laws, regulations, and deductions, ensuring accurate and optimized tax filings. AXP Advisors can help you navigate the complexities of the tax system, identify potential savings, and minimize the risk of errors or audits. By entrusting your income tax to us, you gain peace of mind, save time, and maximize your financial benefits