Navigating the 30% ruling in the Netherlands: Your essential guide to Tax-Free benefits

Are you an expat seeking a financially smart start in the Netherlands? Discover how the 30% ruling can give you a tax-friendly boost, allowing you to enjoy up to 30% of your salary tax-free. However, with key changes arriving in 2024, it’s important to stay informed to make the most of this benefit.

At Go Ahead HiRe, we’re here to help you navigate the Dutch tax landscape with confidence. In this guide, we’ll cover everything you need to know about the upcoming changes to the 30% ruling in the Netherlands, so you can maximize your expat experience.

What is the 30% ruling in the Netherlands?

The 30% ruling is a tax advantage designed for foreign employees in the Netherlands, allowing them to receive up to 30% of their gross salary tax-free. It’s intended to compensate for the additional costs associated with living and working abroad, often referred to as extraterritorial expenses. No need to provide proof of these expenses—you receive a fixed tax-free portion of your salary.

Key benefits of the 30% ruling

Lower income tax: You keep more of your salary compared to others without the ruling.
Expense compensation: Employers can cover more of your moving, travel, and work permit costs.
Employer savings: Employers also benefit from reduced payroll contributions.

Eligibility criteria for the 30% ruling

To qualify for the 30% ruling, you must meet specific conditions:

Residential distance: You must have lived at least 150 kilometers from the Dutch border prior to starting your job.
Dutch payroll: You must be employed by a company that withholds payroll tax in the Netherlands.
Recruited abroad: You must have been recruited from abroad or hired within three months of arriving in the Netherlands.
Specialized expertise: Your skills must be considered scarce in the Dutch job market. The Tax Administration will determine this based on your education, experience, and salary.
Residential distance: You must have lived at least 150 kilometers from the Dutch border prior to starting your job.

Changes to the 30% ruling in 2024

Starting in 2024, the Dutch government is introducing some critical changes to the 30% ruling:

Foreign capital income: Starting in 2025, the partial tax exemption for foreign capital income will be eliminated. A transition period will be available for current beneficiaries.

Income cap: From 2024, the 30% ruling applies to salaries up to €233,000 (the ‘Balkenende norm’). Any salary beyond that will not qualify for the tax-free benefit, which may significantly impact your net income if you earn more than the capped amount.

Phased reduction: The 30% tax-free benefit will gradually decrease over time. For the first 20 months, employees can receive 30% of their salary tax-free, followed by 20% for the next 20 months, and then 10% for the final 20 months.

How to prepare for these changes

If you’re currently benefiting from the 30% ruling or planning to apply, it’s important to prepare:

Check your eligibility and remaining term of the ruling.
Calculate the impact of the new rules on your income and tax situation.
Decide on tax options, such as utilizing the transition scheme for foreign capital income.

Update your financial strategy as needed by adjusting your savings or renegotiating your salary.

Additional perks: fast-track your dutch driver’s license

As a 30% ruling recipient, you can exchange your foreign driver’s license for a Dutch one without the need for a test—just ensure your license is still valid. Be sure to submit your request to your municipality within three months of your arrival.

Maximize your 30% ruling with Go Ahead HiRe

At Go Ahead HiRe, we specialize in helping expats make the most of their financial opportunities in the Netherlands. Whether it’s optimizing your tax situation or navigating the 30% ruling, we’re here to support you.

Ready to get started? Reach out today for personalized guidance tailored to your expat journey!

Source: https://www.papayaglobal.com/