Growing complexity in (international) legislation and regulation means our clients are increasingly in need of truly integrated services. The nature of today’s issues means that our service offering no longer rigidly separates corporate tax, employee tax, social security, VAT & customs, legal and immigration.

As a pragmatic partner, we are proud to master each of these disciplines. These topics are just a small selection to give you an idea of what LIMES international can do for you.

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LIMES Memo's 

LIMES Memo's

February 2023

6.1 Resident employees

Under the 30% ruling, a Dutch resident employee may elect to have ‘partial non-resident taxpayer’ status. This choice can be made each tax year and can be changed on a year-by-year basis. With partial non-resident taxpayer status, for ‘Box-1’ income (business profits, income from employment, and income from owner-occupied property) the employee is considered a Dutch resident taxpayer. However, for ‘Box-2’ (substantial interest) and ‘Box-3’ income (savings and investments), the employee is considered a non-resident taxpayer. As a result, investment income, for example, will not be subject to Dutch taxation, except for income from Dutch sources, such as Dutch real estate (i.e., a second home).  

The employee may still claim personal deductions, such as alimony and annuity payments, though. Fiscal partner regulations, such as optimal allocation of certain deductible costs, are not affected by this choice. Foreign withholding taxes on 'Box- 2' and 'Box-3' income cannot effectively be credited against Dutch tax.
US nationals residing in the Netherlands who have elected to have partial non-resident taxpayer status are considered US residents for tax-treaty purposes. One of the consequences of this legal fiction is that they do not have to report their worldwide income from employment in 'Box-1', but only the income related to the employment activities physically carried out in the Netherlands.

Lastly, an employee electing to have partial non-resident taxpayer status must do so while the relevant tax assessment is still open for appeal, but preferably already when filing the Dutch personal income tax return. In most cases the partial non-resident taxpayer status is advantageous for the employee.

6.2 Pension

An employee who participates in a Dutch pension scheme can accrue pension rights over the pensionable salary, including the 30% allowance. The Dutch wage tax facility for pension contributions will then apply: the employer’s contribution remains tax free, and the employee’s contributions remain tax deductible.

Please note that the employee’s tax-deductible pension contribution while participating in the company pension plan affects the taxable wage of the employee. Since the taxable wage must always meet the salary threshold (see 1.3), the employee may consider waiving the pension rights to increase the taxable salary and remain eligible for the 30% ruling. As an alternative to pension rights, in this case the employee may be better off with a life annuity.

6.3 Net salary agreement

The 30% ruling may also apply to net salary and tax equalisation agreements, in which case the 30% ruling would result in a substantial reduction of the employer’s costs.

The 30% allowance may be paid while the request for the 30% ruling application is still being processed. However, if the request is rejected, taxes on the remuneration will subsequently need to be recovered from the employee. Alternatively, the salary paid will need to be grossed up at the employer’s expense.

In the view of the Dutch Tax Authorities, the 30% ruling can only be taken into account in the payroll administration of the employer. This may cause inconvenience if the 30% ruling is issued after the end of the calendar year in which it can first be applied. In such situations, it may be necessary to update the payroll retroactively and file corrected wage tax returns.

For the application of the 30% ruling the employer and the employee must jointly file a request.

If the request is filed within four months from the first day of employment, the 30% ruling applies retroactively for the period from the first day of employment. If the request is not filed within four months, the 30% ruling only applies from the first day of the month following the month in which the request was filed. The same applies if the employee changes employer (see 1.1.1).
Therefore, it is important to file at least a provisional request within four months from the first day of employment, even if all relevant information is not yet available.

LIMES international uses specific tooling enabling a time-efficient processing of 30% ruling applications. Within five working days of receiving the required information from the employer and employee, LIMES international will determine whether the employee is eligible for the 30% ruling. The Dutch Tax Authorities will issue the official 30% ruling notification, usually within approximately two to six weeks.

If the employee meets all requirements, the Dutch Tax Authorities will send a notification stating that the 30% ruling has been granted. Otherwise, they will send a notification that it has been denied. The latter decision can be appealed and can ultimately be brought before the Dutch tax court.

The Dutch tax authorities will not issue a new notification. The new end date will have to be entered in the payroll administration by the employer.

The 30% ruling can be granted for a maximum period of five years (60 months). The 30% ruling will end on the last day of the salary period after the salary period in which the employment ends (i.e., the actual employment activities cease), provided that this latter salary period falls within the 60-month period.

2.1 Discount ruling

Previous periods of stay and/or employment in the Netherlands will be deducted from the maximum term for the 30% ruling. However,
if these periods of stay and/or employment ended more than 25 years prior to the start of the employee’s current employment in the Netherlands, these will not be taken into account. Periods of work in the Netherlands not exceeding 20 days per calendar year are disregarded, as are periods during which the employee visited the Netherlands for personal reasons for a maximum of 6 weeks per calendar year or a one-off consecutive period not exceeding 3 months. Each period of earlier presence in the Netherlands is separately rounded up to full months for the application of the discount ruling. Periods within the past 25 years in which an employee was subject to Dutch wage tax will also be deducted from the maximum application period of five years, regardless the place of work and residence.

2.2 Transition ruling

As of 1 January 2019, the 30% ruling may be applied for a maximum of five years, down from the previous eight-year term. A transition scheme is in place for employees for whom the 30% ruling applied on 31 December 2018. The end date on the existing notification may have changed due to the new legislation. The new end date is determined as follows:
To be eligible for the 30% ruling the employee must:
  • be recruited outside the Netherlands or seconded from abroad (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 more than 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 must be recruited or seconded from abroad. 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 employer 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 (last working day) and the signing of 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, while all conditions were met.

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 as a qualifying group of wage tax withholding agents [Samenhangende Groep van Inhoudingsplichtigen: SGI].

1.1.2 Freelancers

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.

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 to meet this criterion.

1.3 Specific skills or expertise / scarcity

When applying for the 30% ruling, an employee is deemed to have specific skills or expertise if the employee’s annual guaranteed taxable salary, based on the signed employment agreement, exceeds the ‘salary threshold’, i.e., the minimum salary required to be eligible for the ruling. For 2023 the salary threshold has been set at € 41,954. For employees under the age of 30 who have a qualifying master’s degree, the salary threshold has been set at € 31,891 for 2023. No salary threshold applies for qualifying PhD degree holders, scientists, and certain types of medical specialists.

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.

Please note that the salary will continuously be tested against the norm on an ongoing basis: if the employee no longer earns more than 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 or expertise test mentioned above (i.e., the ‘salary threshold’), a scarcity test applies. However, based on information from the Dutch Tax Authorities, the scarcity criterion will be assumed to have been met if the salary threshold is met. The Dutch Tax Authorities will only require a scarcity test in exceptional circumstances, in which case the following three factors will be considered:

  • 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 more than 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 kilometers from the Dutch border may qualify for the 30% ruling. This especially affects employees from Belgium, Luxembourg and a part of France, the United Kingdom and Germany.

6. Planning opportunities
5. Payroll issues
4. Application procedure
3.1 Base for the 30% Ruling

The maximum 30% tax free allowance is calculated based on the taxable wage from current employment. This includes variable wage components such as bonus payments, income from stock options, and other taxable wage, in cash or in kind. The 30% ruling does not apply to redundancy pay, i.e., income from previous employment or pay during ‘garden leave’.

The 30% tax free allowance is maximised at 30/70 of the taxable wages from current employment during the application period of the 30% ruling. The 30% tax free allowance must be agreed separately.

The 30% ruling does not apply to wages for which relief for double taxation is granted. Unless agreed otherwise, the 30% tax free salary (allowance) is payable on top of the agreed salary. However, from a budget perspective most employers prefer to include the 30% tax free allowance as an integral part of the remuneration package, in which case the contract of employment must include an addendum specifying that the agreed salary will be reduced in accordance with labour law and in exchange for the 30% tax free allowance. This reduction in salary may affect income-related payments (tax credits, etc.).

As mentioned in 1.3 the salary threshold must continuously be met, which may mean that the reduction of the agreed salary and the tax-free allowance will be less than 30%. For example, if an employee earns a taxable wage of € 45,000, given that the salary must exceed the salary threshold of € 41,954 after the deduction of the tax-free allowance, the tax-free allowance is not € 13,500 (30% of € 45,000) but rather € 3,045 (€ 45,000 - € 41,955).

3.2 Maximum tax-free allowance

As from 1 January 2024 the 30% ruling will include a salary limit. The tax-free allowance of 30% will be calculated on the salary only to the extent that it does not exceed the maximum pay for government employees as defined in the Standards for Remuneration Act (Wet normering topinkomens – WNT). For 2023, the maximum pay is € 223,000 based on which the maximum tax-free allowance would be capped on € 66,900. This amount is adjusted for inflation yearly. When an employee does not qualify for the 30% ruling during the entire calendar year, the salary limit will be lowered proportionately.

Employees that already made use of the 30% ruling during the last wage period of 2022, will not be affected by this salary limit until 1 January 2026.

Employees that already made use of the 30% ruling during the last wage period of 2022 and who will switch of employer on 1 January 2023 or later may be affected by the salary limit. If the employee is not continuously employed, the employee will be affected by the new regulations. If the new employment starts continuously after the last working day with the former employer, it may be argued that the employee will not be affected by this salary limit until 1 January 2026 given the specific wording of the grandfathering rules.

Employees who will first use the 30% ruling on 1 January 2023 or later will be affected by the new regulations starting 1 January 2024.

3.3 Extraterritorial costs 

The 30% tax free allowance can be paid without the employee having to prove that the costs deemed to be reimbursed through this allowance were actually incurred. On the other hand, if the actual extraterritorial costs exceed the 30% allowance, the employer may reimburse these higher costs on a tax-free basis. Extraterritorial costs are defined as the extra costs that are incurred because the employee is living outside his/her home country. These include, for example:
  • travelling costs for home leave
  • higher costs of living
  • cost of finding suitable housing and schools for the children
  • double accommodation costs (homes in both countries)
  • cost of applying for a residence permit and converting official documents (work permits excluded)
  • language courses

Since the 30% tax free allowance is intended to cover all extraterritorial costs, the actual extraterritorial costs may no longer be reimbursed tax free in addition to the 30% allowance. Other professional costs relating to the employment that are not deemed to be extraterritorial costs may be reimbursed, in part or in whole, tax free (in addition to the 30% tax free allowance), in accordance with the provisions of the Dutch Wage Tax Act 1964. For children attending an international school, the school fees may be reimbursed tax free in addition to the 30% allowance. The school fees can be reimbursed tax free for an international school or an international department of an ordinary school if the following conditions are met:

  • the education is based on a foreign system
  • the school or department is mainly open to children of foreign employees
3. Tax free allowance
2. Duration period
1. Conditions


30% Ruling

The 30% ruling is a Dutch tax facility aimed at attracting foreign employees with specific skills or expertise to work in the Netherlands. Application of the 30% ruling results in a substantial increase in net salary and/or a substantial reduction of the employer’s costs. The 30% ruling provides for a tax-free allowance (30% allowance), which is deemed to cover all ‘extraterritorial costs’, i.e., extra costs employees incur when living outside their home country.

April 2022


For an employee, a salary split situation may arise if the employee physically works in the host country while also continuing to work and live in his/her home country. For individuals receiving directors’ fees in their capacity as statutory director of a company in the host country, under most tax treaties they do not have to be physically present in the host country for a salary split to exist.

A salary split can be (financially) beneficial if the method to provide relief from double taxation in the home country, is the so-called exemption method. If the home country provides for relief from double taxation by offering a tax credit for taxes paid in
the host country, there would generally be no benefit to the salary split since the taxpayer would (at least) pay income tax
according to the tax rates in the home country.

For Dutch resident employees who have a salary split – as a general rule – the exemption method can be utilized. For Dutch resident statutory directors, whether the exemption method or a tax credit applies, is dependent on the applicable tax treaty. Some tax treaties prescribe an exemption, others a tax credit. Please find a few examples below:

A Dutch resident statutory director of a company resident in Germany, France or Belgium is therefore unlikely to benefit from a salary split with these countries, while the Dutch resident statutory director of a Spanish or Italian company could potentially benefit, under the right conditions. Whether the salary split of the Dutch resident statutory director could be financially beneficial, would therefore have to be analysed on a case-to-case basis.

In this example, the salary split provides a financial advantage of €9,375.

A salary split exists when the salary of an employee is attributed to two or more countries. It can arise in several ways. For example, a salary split situation arises when you are formally employed by a company in another country (host country) while continuing your employment with your formal employer in your home country. Consequently, you will most likely become liable to tax in the host country, while continuing to be liable for tax in your home country as well. Tax treaties and/or domestic tax law should prevent double taxation. If the foreign tax relief provided by the home country exceeds the tax liability in the host country, the salary split is financially beneficial.


  • The employee is a resident of the Netherlands.
  • The employee physically works for 50% of the time in the Netherlands, 25% in France for the French group company,
    and 25% in Germany for the German group company.
  • The employee has a formal employment contract with the Dutch group company.
  • 100% of the salary of the employee is paid via the Dutch payroll.
  • For purposes of simplicity social security is disregarded in this example.
  • The employment costs are cross charged to the French and German group companies relative to the employee’s
    physical presence in those countries.
  • In France and Germany the employee works under the direction of the respective group companies.
  • The total annual gross salary amounts to €150,000.
  • The average tax burden in the Netherlands is 40%.
  • The average tax burden in France is 25%.
  • The average tax burden in Germany is 30%.

Examples salary split situations

The general situation as described above is just one in which a salary split is created; this may also arise in the following situations (among others):

  1. The employee is formally employed with an employer in his/her home country, but also physically works in the host country while maintaining an economic employment relationship* with a company in the host country. This typically occurs within international groups and in secondment situations.
  2. The employee works more than 183 days per calendar year/12-month period in the host country without having an employer in the host country.
  3. The employee is employed by an employer located in a country other than the employee’s home country while working in this and other countries.
  4. The employee works for the permanent establishment (branch) of his/her employer in the host country.

*An economic employment relationship exists if the employee works under the direction of the employer and the employer bears the cost, risk
and responsibility for the employee, without the employee having a formal contract of employment with that employer. 

The Netherlands and salary split

For an employee residing outside the Netherlands who is covered by social security in his/her home country, a salary split with the Netherlands can be especially attractive. Given an indicative Dutch-sourced gross taxable income of € 60,000, the overall tax burden would be approximately 20% (in 2023). If the 30% ruling applies, the tax burden on a Dutch sourced gross taxable income of € 60,000 would be approximately 9% (in 2023). For more detailed information on the 30% ruling please see our 30% ruling memo.

Salary split benefit

If the avoidance of double taxation by the home country (exemption method) exceeds the tax obligation in the host country, a salary split can be beneficial. However, if the employee has substantial tax reductions in his/her home country, or if the average tax rate in the host country is higher than that of the home country, the outcome could be unfavourable.


This example is a simplified illustration of how a salary split works in practice. The tax rates shown are fictitious.

From a to z


Salary split

For employees and directors with international responsibilities a salary split is a legitimate and often attractive instrument to reduce taxes. In many cases it is even the (legally and fiscally mandatory) consequence of an actual working situation. In this memo we elaborate on the conditions and benefits of a salary split structure.

April 2022

The first € 37,149 of taxable income is taxed at a rate of 9.28%. This means that only € 3,447 in tax is due in the first tax bracket. The annual amount of tax due can even be less when certain tax credits apply.


Under the provisions of the 30% ruling (tax facility), an employee may be entitled to a tax-free cost allowance amounting to 30% of the income from present employment (including the allowance). To be eligible for this facility, employees must be recruited or seconded from abroad and have specific expertise or skills that are not available (or are scarce) on the Dutch labour market.
An employee is deemed to have a scarce expertise or skill if the employee’s annual taxable salary (excluding the 30% allowance)
is at least € 41,954 (2023).

A director, too, can qualify for the 30% ruling provided that all other conditions for the ruling are met. To give an example of the benefit of the 30% ruling, assuming an indicative gross remuneration of € 60,000: if the 30% ruling applies, the tax due on the gross remuneration of € 60,000 is € 5,239; otherwise € 11,886 is due. See also the below table.


Taxpayer is:

  • a resident of a foreign country;
  • a director of a company established in the Netherlands;
  • subject to Dutch wage tax and income tax;
  • not subject to Dutch social security legislation

Table (2022 rates)


Under most tax treaties signed by the Netherlands, the Netherlands can and will levy tax on the remuneration received by a
non-resident director of a Dutch resident entity.

Depending on the applicable tax treaty, the state (country) of residence of the director will have to provide for double tax relief. Whether a director benefits from the situation with his or her Dutch-sourced director’s remuneration depends on two factors:

  1. how the state of residence eliminates or mitigates double taxation
  2. the average tax burden on the director’s worldwide income in the state of residence.


  • Employee X and director Y are both residents of a foreign country.

  • Employee X and director Y both perform work in their country of residence for the Dutch entity (A).

  • Employee X and director Y are both subject to social security contributions in the country of residence (‘foreign country’).

In the situation described above, the remuneration of director Y will, in most cases, be taxable in the Netherlands. The remuneration of employee X on the other hand will be taxable in the foreign country.

Dutch tax rates 

The first bracket of the Dutch income tax provides a combined rate for social security contributions and tax. Director Y is subject to social security legislation in a foreign country and is therefore only liable to tax on his or her Dutch sourced taxable income.

A brief insight


Directors' remuneration

From an international tax standpoint, directors’ remunerations differ from other types of remunerations. When a Dutch entity decides to remunerate one of its non-resident directors, the amount of tax due can turn out to be surprisingly low.

Although the situations of person X and Y may not seem to differ at first sight, for tax purposes they will be treated differently.

Duty to provide information

You have a duty to report all changes that are relevant to the employee’s right of residence and all changes that are relevant to your status as a recognised sponsor to the Immigration and Naturalisation Service (IND). The IND reserves the right to request supplementary documentation and or to dismiss applications at their discretion. The IND may even cancel a Dutch residence permit during the period of validity, if the requirements are no longer met. 

Changes with regard to the employee 

All changes that affect the employee’s right of residence must be reported to the IND within 4 weeks. Such changes include (but are not limited to) the following:

  • The employee no longer works for you.
  • The employee no longer meets the income requirement*.
  • The employee is no longer living in the Netherlands/you no longer know the employee’s address/country of residence.
  • The employee will be performing different work that does not come under the rules for which the Dutch residence permit was issued.
  • The employee does not have (or no longer has) lasting and sufficient means of support.
  • The employee has changed his/her (home) address to a foreign address.

*For example the employee does not meet the income requirement, because he/she will work fewer hours or be on a certain type of leave. 

Changes with regard to the recognised sponsor

All changes that will affect your status as a recognised sponsor must be reported to the IND within 4 weeks*. Such changes include (but are not limited to) the following:

  • A new contact person.
  • A change to the name under the articles of association. 
  • A change to the bank account number for direct debits.
  • Suspension of payments to the Tax Authorities.
  • A change to the company’s legal form. 
  • A change to the composition of the shareholders.
  • Deregistration from the Dutch Chamber of Commerce.

* If the company’s address changes, the IND must be notified within 2 weeks. 

Duty to keep records

You have a duty to keep records and an obligation to retain them, for up to 5 years after the sponsorship/employment has ended. Your records must include the following information about the employee:

  • A copy of the employment contract. 
  • A copy of the passport.
  • A copy of the Dutch residence permit including the work permit (if applicable).
  • A copy of the antecedents certificate.
  • The payslips.

Duty of care

You have a duty to ensure a careful recruitment and selection process. You must also inform the employees of the relevant regulations as well as their rights prior to, during and at the end of the employment contract. This includes (but is not limited to) the following:

  • The employee may only enter the Netherlands upon collection of an entry visa (MVV), if applicable.
  • The employee may, normally, only start after collection of a work permit/authorisation effective from the first date of the employment contract. 
  • The employee must arrange all required appointments/registrations upon arrival in the Netherlands.
  • The rights of the employee to travel within the Schengen countries and stay outside the Netherlands for a limited period of time.
  • The consequences of termination of the employment contract. 

If you, as a recognised sponsor, do not fulfil the aforementioned obligations, the IND may impose sanctions, such as a warning or penalties.

Withdrawal of the status as recognised sponsor

If you, as a recognised sponsor, do not employ a highly skilled migrant or an Intra company transferee (ICT) within 3 years from the date your company was registered as a recognised sponsor, the IND reserves the right to withdraw your status as a recognised sponsor. Therefore, please note, you must intend to employ multiple highly skilled migrants and/or ICT’s, to minimise the risk of losing the status. 

January 2021

Meet the criteria


Legal obligations of recognised sponsors

As a recognised sponsor, you have certain legal obligations. You are responsible for ensuring that your employees meet the criteria for obtaining their Dutch residence permit and remain eligible for this permit during its validity. Furthermore, as a recognised sponsor, you must fulfil the following legal duties:

  • Duty to provide information.
  • Duty to keep records and obligation to retain them.
  • Duty of care. 

April 2022


A bank savings scheme is an alternative for a life assurance. Premiums paid for both facilities are tax deductible up to certain limits.
The differences and matches between the two facilities are listed below.


In order to benefit from the above mentioned tax benefits, the employee and his spouse/ partner has to sign a pension waiver. From a perspective of duty of care of the employer (“zorgplicht”) it is advisable to renew this waiver annually, in order to make sure that the employee is well aware of his choice.

Furthermore, the employer should be aware that paying a bonus rather than a pension contribution may have an effect on income related benefits and payments. For example it may also affect the amount of a termination payment. Therefore it is important to label the additional salary in the correct way.


For the sake of completeness, please note that upon emigration from the Netherlands of the expatriate employee,  the Dutch tax law provides for a protective tax assessment in order to prevent the employee from redeeming  the pension or life assurance policy during 10 years after emigration. After the lapse of said 10 years, the employee may consider redemption after all. However, the employee should first review which state has the right to tax the proceeds from the redemption of the policy according to the applicable tax treaty and secondly - if the new residence state has the right to tax - for how much.

The system of protective tax assessments applies to pensions as well as life assurance policies. As such it will not make
a difference whether the employee participates in a pension plan or in a life assurance policy.

For a more detailed explanation of the above tax planning opportunity, please contact:
+31 88 089 90 00


The above example can be implemented dependent on personal circumstances and in accordance with legal requirements.
For example, the maximum contribution into the life assurance/bank savings scheme depends on the employee’s (Dutch taxable) salary
(in previous and current employments) and (Dutch recognised) other pension rights accruals in the current and previous 7 years.

  • Participation in a qualifying pension plan for Dutch tax purposes, will reduce the taxable salary, which might cause that the employee no longer qualifies for the salary norm of the 30% ruling (anymore).

  • Choice of basis for pension contribution: inclusive or exclusive of 30% allowance and thereto related formal and legal issues.

  • Participation in a qualifying pension for Dutch tax purposes effectively provides for a maximum tax benefit of only 34.65% instead of 49.50%.

The above potential pitfalls and risks can be prevented if the employee waives his pension rights and takes out a life assurance/bank savings scheme instead. The employer can pay the amount of the employer contribution in the pension to the employee as regular salary or a bonus. In other words, the employer costs will not change. Moreover, it provides a tax benefit to the employee (or the employer depending on the structure).

In this memo we will elaborate on this potential tax benefit/solution, and the various alternatives to structure it.


The granting of Dutch approved pension rights by the employer remains tax free. Therefore, if the employer provides a pension contribution of € 1,000 with an approved pension insurer, accrued pension rights will amount to € 1,000, whereas the future benefits will be taxable; we refer to variant I in the table.


There are three tax beneficial alternatives by using a life assurance/bank savings scheme rather than a pension assurance
scheme. On the next pages we elaborate on the differences between life assurance and bank savings schemes.

Alternative A
The employer grants a bonus of € 1,000 to the employee rather than a pension contribution, to enable him to conclude his personal approved life assurance/bank savings scheme. The bonus payment nets the employee € 654 (70% of € 1,000 taxable at 49.50% amounts to € 346 of tax). However, the employee may deduct his entire contribution into the life assurance policy from his taxable income. His contribution may be € 1,294, to be financed for € 654 from net salary and for € 640 from the income tax refund (€ 1,294 @ 49.50%). Accrued life assurance/bank savings rights will amount to € 1,294 at employer’s costs of the same € 1,000, also with future benefits taxable. We refer to variant II in the table.

Alternative B
The employer grants a bonus of € 773 to the employee rather than a pension contribution of € 1,000. This bonus payment nets the employee € 506 (70% of € 773 is € 541, taxable at 49.50% amounts to € 267 of tax). However, the employee may deduct
€ 1,000 to pay into the life assurance policy/bank savings scheme and deduct this from his taxable income. This will result in a tax reimbursement of € 495. As such the employer realises a cost reduction of 24% while the employee has the same accrual for old age pension purposes of € 1,000 without additional costs compared to the regular pension assurance. We refer to variant III in the table.

Alternative C
The employer grants a bonus of € 1,000 to the employee rather than a pension contribution, to enable him to conclude an approved life assurance/bank savings scheme. If the employer’s cost should remain the same and the amount of the accrual as well, the employee retains € 149 in net salary, that can be spent on improvement of current life while having taken care of future life. We refer to variant IV in the table.

This example is of course based on assumptions, the most important being a taxable salary that reaches well into the 49.50% bracket and no other pension rights accruals for a number of years consecutively. Further tax consequences, for example those upon emigration and upon receiving the benefits, fall beyond the scope of this memo.

The above example shows that the 30% ruling provides for an opportunity for a tax assisted accrual of “pension” rights, of course entirely within the framework of the law.

The calculation can be depicted as follows (in €, rounded):



When it comes to old age income assurance, in addition to the Dutch state pension, the Netherlands distinguishes between:

  1. pension insurance through the employer; and 
  2. life assurance policies/bank savings schemes, concluded in private.

If an employee is entitled to the 30% ruling, to participating in a qualifying pension plan for Dutch tax purposes gives rise to, among others, the following points of attention.

April 2022


One of the tax-friendly schemes is facilitated through WBSO, a Dutch law promoting research and development.
This law provides tax incentives for companies, knowledge centres and self-employed persons involved in R&D.

The WBSO R&D tax credit scheme run by the Ministry of Economic Affairs and Climate Policy is intended to provide 

entrepreneurs with an incentive to invest in research. Under this law, companies can lower the wage costs for R&D, and other R&D costs and expenditures, such as for prototypes or research equipment. You can apply for the R&D deduction on the tax 

return you submit to the Dutch Tax and Customs Administration. Companies pay less wage tax and lower their national
insurance contributions.


For the purpose of this law, research and development is defined as:

  • development of technically new physical products, physical production processes, software or components thereof; and
  • technical-scientific research seeking to explain phenomena in fields such as physics, chemistry, biotechnology, production technology and information and communication technology.


Applications must be received by the day before the month of the desired start of the period for which this facility is required. For example,
an application must have been received by the Dutch Tax Authorities on the 30th of April if  you want the facility to start on the 1st of May.
An exception is the 1st January which requires the application to be received before the 21st of December. The application of self-employed entrepreneurs covers the period from the date of submission to the end of the calendar year.


Another interesting tax-friendly scheme is the ‘Innovation Box’, the purpose of which is to stimulate technical innovation in the Netherlands. Profits derived from intangibles that qualify for the Innovation Box scheme are taxed at a tax rate of 9%. Considering that the normal Dutch corporate income tax rate is 25.8% on taxable profits above € 200,000, innovative companies can make significant tax savings in the Netherlands.

Technical innovations developed under an approved R&D project that qualifies for a WBSO certificate (‘R&D declaration’) from the Ministry of Economic Affairs generally have access to the Innovation Box scheme. Larger taxpayers, i.e. taxpayers with a net group turnover of more than EUR 250 million over 5 years or gross profits from innovative assets of more than EUR 37.5 million over 5 years, only qualify for the Innovation Box regime if they have a qualifying “legal entry ticket”, i.e. a patent, utility model, plant breeder’s rights, orphan drug and supplementary protection certificate, software or other asset that is not common and/or a novelty item. For larger taxpayers, additional entry conditions apply.

If you are interested in learning more or would like to discuss the options please feel free to contact us.




Historically, the Netherlands is known for its long and strong tradition of setting out innovative projects around the world.

In sectors such as water management, energy and food, the Netherlands is leading the way in international research and
development of new technologies. The Netherlands has various regulations to facilitate these initiatives in a tax-friendly way.