What is 30% Ruling and Who Is Eligible?

The 30% ruling is a tax advantage for highly skilled migrants moving to the Netherlands for work. Under this rule, 30% of your salary may be tax-free, which can significantly reduce your tax burden. Here’s a quick overview:

The 30% ruling is designed to attract skilled professionals to the Netherlands by offsetting the expenses typically associated with relocating, such as travel costs, moving expenses, and the higher cost of living.

To qualify, employees must meet specific criteria:

1. They must have skills or expertise considered scarce in the Dutch labor market.
2. They should have lived more than 150 kilometers from the Dutch border before their employment.
3. The employment agreement must be directly between the employee and the Dutch employer, who is recognized by the Dutch tax authorities.

The benefit lasts for a maximum of five years, a reduction from the previous term of eight years following a policy change in 2019. It’s important to note that this period can be affected by previous stays or employment in the Netherlands.

Besides the tax reduction on salary, the ruling also allows for easier access to Dutch residency for the employee’s family and simplifies swapping a foreign driver’s license for a Dutch one.

The application for the 30% ruling must be joint between the employer and employee and submitted to the Dutch tax office. The process generally involves proving the employee’s expertise and the scarcity of this skill set in the Netherlands.

Eligibility for 30% Ruling:

1. Skills or Expertise: The applicant must possess skills or expertise that are scarce in the Dutch labor market. This generally means that the individual should have a specialized knowledge or a high level of qualifications that are not easily sourced within the Netherlands.
2. Previous Residence: The applicant must have lived more than 150 kilometers from the Dutch border for more than 16 out of the 24 months before their employment contract starts in the Netherlands. This distance criterion is designed to ensure that the ruling is used to attract international talent rather than individuals already living nearby.
3. Employment Contract: The employment relationship must be directly between the skilled migrant and a Dutch employer who is recognized by the Dutch tax authorities. The employer must agree to apply for the 30% ruling on behalf of the employee.
4. Salary Level: The applicant must earn a minimum salary threshold, which is adjusted annually. This threshold is intended to confirm that the skills brought by the employee are indeed high in value and demand. For 2023, the required minimum taxable salary (after application of the 30% exclusion) is €39,467 for those under 30 with a master’s degree, and €56,381 for other cases.
5. Previous Stays or Work in the Netherlands: If the applicant has previously lived or worked in the Netherlands, this might affect eligibility. The ruling is generally not available if the applicant has lived in the Dutch border region or has previously benefited from the ruling within the past 25 years.
6. Consent for Scientific Research: In some cases, researchers moving to the Netherlands to work at recognized research institutions may be exempt from some of the above requirements.