Tax Incentives in The Netherlands
The Netherlands has long been an attractive destination for highly skilled expatriates, and one of the key incentives it offers is the "30% tax ruling." This tax advantage is designed to attract skilled professionals from abroad by providing a favorable tax regime to ease their relocation and settlement in the country.
Understanding the 30% Tax Ruling in the Netherlands
The 30% tax ruling is a Dutch tax exemption for expatriate employees working in the Netherlands. Under this rule, 30% of the gross salary is tax-free, effectively reducing the tax burden on the employee. This benefit is granted for a maximum duration of five years.
Additional Benefits of the 30% Tax Ruling
Besides the tax reduction, employees benefiting from the 30% ruling enjoy other advantages, such as:
- Exemption from declaring foreign bank account balances and financial investments in their tax returns.
- Exemption from declaring ownership of real estate located abroad in their tax returns.
Partial Non-Resident Status
The 30% ruling allows individuals to opt for a "partial non-resident" status in their tax returns. This means that while residing in the Netherlands, they can be considered non-residents for tax purposes for box 2 and box 3 income (which includes income from savings and investments), but residents for box 1 income (which includes employment income).
Eligibility for the 30% Ruling
To qualify for the 30% ruling, expatriate employees must meet the following criteria:
- Employment Status: The ruling is applicable only to employees with a contract with a Dutch employer. Self-employed individuals do not qualify, although there are structures like forming a Dutch private limited company (BV) to become an employee of and benefit from the ruling.
- Written Agreement: A written agreement between the employer and employee, indicating the application of the 30% ruling, is required by the Dutch tax authorities.
- Recruitment from Abroad: The employee must have been recruited from outside the Netherlands and lived more than 150 km from the Dutch border for at least 16 months before moving to the Netherlands.
- Specific Expertise: The employee must possess expertise or skills scarce in the Dutch labor market.
- Minimum Salary: There is an annual minimum taxable salary requirement, which is adjusted yearly.
Self-Employed Individuals and the 30% Ruling
Self-employed individuals can also take advantage of the 30% tax exemption by establishing a Dutch company, such as a BV, and becoming an employee of that company.
Duration of the Ruling
The 30% ruling is currently valid for five years and can be applied retroactively if requested within four months from the start of employment in the Netherlands.
The 30% tax ruling in the Netherlands represents a significant tax advantage for expatriate employees, making the country an even more attractive location for international talent. With the added benefits of partial non-resident status and exemptions on foreign income declarations, the ruling is a key component of the Netherlands' strategy to attract and retain skilled professionals from around the world.
Disclaimer: Always speak directly to an attorney; blog posts are not a sufficient source of information to make decisions, may not be appropriate for your situation, may not be well researched, and may not be current at the time you read them, always speak directly with an attorney.
Contact us today to learn more about how we can assist you in achieving your goals and securing a prosperous future.
YITL Books (click on the title to see it on Amazon)
Expand Your Wealth with Tax Havens, YITL Network, 2023
Books published by the lawyers of our network
The secrets of international tax optimization: To always live as "free" entrepreneurs, and never find yourself at the mercy of a single government
BOOK A HIGHLY CONFIDENTIAL CONSULTATION VIA MAIL
HOW CAN YOU USE OUR SERVICES?
If it is your first time, here are some examples of the results our tax lawyers and international tax optimization experts can help you achieve:
- international tax optimization;
- creation of Personalized Plans and Worldwide Tax Optimization Plans tailored on your situation, to identify the best solutions for your situation and businesses;
- protect your assets;
- acquire multiple residences;
- acquire new passports;
Check our main page now and contact us https://yourinternationaltaxlawyers.net