Breedte test

30% tax ruling

Many of our clients are eligible for the 30% tax ruling facility. However, sometimes our clients have some unanswered questions, which I will address below:

In case the 30% tax ruling fully applies, a reduction of 30% of the gross salary of the employee is possible. In return, the employee should receive this 30% reduction as a tax free reimbursement for extra expenses incurred during their move to the Netherlands.

This is the most common way of application, as it does not influence the salary burden for the employer. However, there is no obligation for the employer to pass on the advantage of the ruling to the employee. In practice, the employer can partially or wholly take the benefit.

The fact that the gross salary is reduced by 30% may have implications in case of requiring unemployment or disability benefits. The reason is that these benefits are based on taxable salary. Therefore the tax authorities require that both employer and employee are aware of these consequences. One can include this written acknowledgement by means of a clause in the employment contract or as an addendum to the employment contract.

In 2015, the annual taxable salary for an employee must be more than €36,705. However, a lower salary of €27,901 is applicable for those who have completed a Master’s degree and are younger than 30 years old.* Furthermore, for scientific researchers, employees working in scientific education, or doctors in training, there is no minimum salary requirement. Please note that there are restrictions regarding the companies or institutions for which this group of employees can work. If you receive a salary that is below the requirement, you may still receive a tax benefit. However, it will be less than 30%.

Convenant with tax authority

Settle Service holds a covenant with the Dutch tax authorities. This convenant enables us to take a decision after the receipt of all required documents. The advantage for you is that the implementation of the ruling can be immediate, right after our decision. Instead of waiting a minimum 4 weeks before the tax authorities reach their decision. The tax authorities perform random spot checks on our decisions annually.

*Please check our most recent blog items for the current salary requirements.