30% ruling | 01
1.0 CONDITIONS To be eligible for the 30% ruling the employee must:
- be recruited outside the Netherlands or seconded from a country other than the Netherlands (see 1.1)
- be employed by a Dutch wage tax withholding agent (see 1.2)
- have specific expertise or skills that are not available or are scarce on the Dutch labour market (see 1.3)
- in at least 16 of the 24 months prior to the first day of work in the Netherlands, have lived at a distance of more than 150 kilometres from the Dutch border (see 1.4).
1.1 EMPLOYEE RECRUITED OR ASSIGNED FROM ABROAD
A crucial criterion for the 30% ruling is that the employee be recruited or seconded from outside the Netherlands. This means that, to be on the safe side, the Dutch employment or secondment contract should be signed before the employee arrives in the Netherlands. If the spouse who joins the employee has a job offer to work in the Netherlands, the same procedure applies.
1.1.1 CHANGE OF EMPLOYER
When an employee changes employers within the Netherlands, this clearly means that the new employer is not recruiting or seconding the employee from abroad. However, as an exception to the condition mentioned above, the 30% ruling can continue to apply if the employee changes employer provided that all other conditions of the 30% ruling are still being met. The ruling can only be continued if the period between the end of the previous employment and signing the new employment contract does not exceed three months. This continuation is also possible if the previous employer ‘forgot’ to apply for the 30% ruling. Please note that a transfer of an employee from one group company to another group company is also considered a change of employer unless the Dutch Tax Authorities consider both group companies a qualifying group of wage tax withholding agents [samenhangende groep van inhoudingsplichtigen: SGI].
Freelancers from abroad who meet the conditions for the 30% ruling (apart from being an employee) may be eligible as well by ‘opting-in’ as an employee. By ‘opting- in’, the freelancer can benefit from the 30% ruling while remaining ‘independent’ for Dutch labour law purposes.
A crucial criterion for the 30% ruling is that the employee be recruited or seconded from outside the Netherlands.
1.2 DUTCH WITHHOLDING AGENT
To apply for the 30% ruling, the employee must have a withholding agent for Dutch wage tax purposes. A foreign employer may voluntarily register as a withholding agent for Dutch wage tax purposes in order to meet this criterion.
1.3 SPECIFIC SKILLS OR EXPERTISE / SCARCITY
An employee is deemed to have specific skills or expertise if the employee’s annual taxable salary (excluding the 30% allowance) exceeds the ‘salary threshold’, i.e. the minimum salary required to be eligible for the ruling. For 2021 the salary threshold has been set at € 38,961. For employees under the age of 30 who have a qualifying master’s degree, the salary threshold has been set at € 29,616 for 2021. No salary threshold applies for qualifying PhD degree holders, scientists and certain types of medical specialists. Salary in kind and variable salary components are also included when calculating the salary. Salary received from foreign employment will be added to the Dutch salary when determining whether the salary at least meets the norm. In the case of part-time employment, the part-time salary must still be at least equivalent to the salary threshold. The part-time salary will not be ‘recalculated’ to a 100% employment salary. The salary level will be tested against the norm on an ongoing basis: if the employee no longer earns at least the salary threshold, the specific skills or expertise cannot be proven and the employee will no longer qualify for the 30% ruling. The salary thresholds are indexed annually.
1.3.1 SCARCITY TEST
Apart from the specific skills/expertise test mentioned above (i.e. the ‘salary threshold’), a scarcity test applies. However, based on information from the Dutch government, the scarcity criterion will be assumed to have been met if the salary-norm criterion is met. The Dutch tax authorities will only require a scarcity test in exceptional circumstances, in which case the following three factors will be taken into account:
- the education level of the employee
- the relevant job experience of the employee
- the salary level of the Dutch job compared to the salary level in the employee’s home country.
1.4 KILOMETER NORM
Only employees who, for at least 16 months of the 24 months prior to the first day of work in the Netherlands, have lived at a distance of more than 150 kilometres from the Dutch border may qualify for the 30% ruling. This especially affects employees from Belgium, part of Germany and Luxembourg.
For employees under the age of 30 who have a qualifying master’s degree, the salary threshold has been set at €29,616 for 2021.