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Article

3 min read

Expat Tax Break Guide: Netherlands New 30/20/10 Ruling

Legal & compliance

Author

Jemima Owen-Jones

Last Update

July 08, 2024

Table of Contents

What are the conditions to apply for the tax benefit?

How is the tax benefit calculated now?

How do I apply for the tax benefit?

Can I claim the tax benefit retrospectively?

Does the tax benefit still apply after a salary increase?

Can I change employers while receiving the tax benefit?

Can I take advantage of the tax benefit if I live in the border region?

Can I get the tax benefit if I have worked in the Netherlands before?

I have a PhD or doctoral degree in the Netherlands. Can I get the tax benefit?

Are there any other advantages to the tax benefit?

What are extraterritorial costs?

Let Deel apply and calculate the tax benefit for you

Key takeaways
  1. The Netherlands’ 30% ruling is a tax benefit that enables Dutch employers to give highly skilled migrant employees 30% of their salary tax-free for up to five years.
  2. The Dutch government recently amended the ruling. Effective January 1, 2024, the tax benefit will still apply for a maximum of five years, but the employer must reduce the benefit over the course of the exemption period: 30% for the first 20 months, 20% for the next 20 months, and 10% for the remaining 20 months.
  3. Foreign employees (and their Dutch employers) hired and paid through Deel can benefit from a hands-off approach to the tax benefit application and calculation. When your Dutch employer creates your employment contract on the Deel platform, they can indicate “yes” to the “apply for tax ruling?” question, and we’ll take care of the rest.

If you’re a highly skilled migrant going to work in the Netherlands for a Dutch employer from another country, you may experience a higher cost of living than you are used to for things like accommodation, bills, and travel costs to your home country. These costs are called extraterritorial costs, and under the Dutch tax benefit, you could receive 30% of your salary tax-free from your employer.

Since January 2019, the Dutch tax benefit has enabled employers to reimburse employees for extraterritorial costs up to 30% of their taxable salary for up to five years. This reimbursement is tax-free for both the employer and the employee.

The ruling (under the 2024 tax plan) has since undergone an amendment.

Effective January 1, 2024, the tax benefit will still apply for a maximum of five years, but your employer must reduce the benefit over the course of the tax exemption period: 

  • 30% of income will be tax-exempt for 20 months

  • 20% of income will be tax-exempt for the next 20 months

  • 10% of income will be tax-exempt for the last 20 months

 For a 30%-ruling with a term shorter than five years, the same percentages and periods apply.

The government has implemented a transitional arrangement for those already receiving this benefit. You can check the correct end date of your benefit here.

What are the conditions to apply for the tax benefit?

You can apply for the tax benefit if you meet the following conditions: 

✔️ You are an employee (not an independent contractor)

✔️ Your employer hired you outside of the Netherlands. You must have lived at a distance of more than 150 kilometers in a straight line from the Dutch border for more than 16 months in the 24 months before your first working day in the Netherlands. You are also outside the Netherlands if you live in Aruba, the BES islands, Curacao or Sint Maarten. 

✔️ You are considered a highly skilled migrant and have specific expertise or experience that is scarcely available in the Netherlands, and your annual salary, not including the tax-free allowance, is more than: 

  • €46,107 in 2024

  • €41,954 in 2023

  • €39,467 in 2022

  • €38,961 in 2021

Or  

✔️ You are younger than 30, and you have a Dutch academic master’s degree or have obtained an equivalent title in another country, and your annual salary, not including the tax-free allowance, is more than:

  • €35,048 in 2024

  • €31,891 in 2023

  • €30,001 in 2022

  • €29,616 in 2021

Or

✔️ You conduct scientific research at a designated research facility or are a doctor training to become a specialist. The amount of your salary is not important.

How is the tax benefit calculated now?

For the first 20 months, your employer deducts 30% of your taxable income from your gross pay and then calculates your taxes on the remaining taxable income. Your employer then adds the 30% that they deducted from your net pay as a reimbursement of expenses, which is not subject to income tax.

Note that you, the employee, must still meet the minimum salary requirements after the 30% reduction. (Your minimum salary can include non-cash advantages such as holiday allowance, company car, and other benefits.)

For example, if your original annual salary is €40,000, reducing it by 30% reduces it to €28,000. This would take it below the minimum threshold. You would, therefore, only be able to receive a reimbursement that brings your salary down to the threshold (which is currently €1,653 on a €40,000 salary). You would still benefit from the 30% ruling, but not for the full amount.

But if, for example, your salary is €55,000, this could be split between a €38,500 base salary and €16,500 as a reimbursement because your reduced salary is above the current threshold. This means you can enjoy the full benefit of the 30% ruling.

After the first 20 months, only 20% of your income will be tax-exempt. Following that period, only 10% of your income will be tax-exempt for a further 20 months. After this period, you will have received the benefit for the full five years, and the tax benefit must stop.

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How do I apply for the tax benefit?

If you meet all the conditions, and the employer has also agreed that the ruling is applicable, you can apply for the tax benefit jointly with your employer. Complete the application and post it to the Dutch tax authority (Belastingdienst). You will receive a reply within eight weeks.

You and your employer must start the application within three months of the employee’s start date. The application can take three months to be approved, but it will be valid if the process starts within the first three months.

You will need to provide the Dutch tax authority with copies of the following:

  • Passport or valid photo I
  • A Dutch employment contract or a letter from your employer confirming that they offered you the position
  • Your BSN number, if you have it
  • Dutch residence and Dutch work permits (if applicable)
  • Details of your Dutch address
  • Proof of residence in another country before the hiring process began
  • Company details, including company tax number
  • Written agreement clearly stating that both parties have consented to the application for the ruling

Can I claim the tax benefit retrospectively?

Yes. The Dutch tax benefit will become effective in retrospect if you and the employer apply within four months after the first day of employment. If you submit the application after four months, it will become effective as of the first day of the month following the month of application.

Does the tax benefit still apply after a salary increase?

Yes. So long as your salary meets the minimum salary threshold, the tax benefit applies, even after a salary increase in the future, including any bonuses or allowances granted.

Can I change employers while receiving the tax benefit?

Yes. If you need to change employers while receiving the tax benefit and your new employer meets the conditions, your tax benefit will remain valid. You do not have to submit a new application, but you will need to update the application within three months of the end of your former job.

Can I take advantage of the tax benefit if I live in the border region?

No. You must have lived at a distance of more than 150 kilometers in a straight line from the Dutch border for more than 16 months in the 24 months before your first working day in the Netherlands. You are not allowed to have lived in Belgium, Luxembourg, parts of Germany, France, or the United Kingdom.

Can I get the tax benefit if I have worked in the Netherlands before?

Yes. If you previously qualified for the tax benefit and then moved outside the Netherlands, you can reapply as long as you meet all the following conditions:

  • Your previous work period started maximally five years ago

  • When your previous work started, you lived more than 16 of the 24 previous months 150 kilometers (as the crow flies) from the Dutch border

  • You received a valid decision for the tax benefit during your previous work period. Or you can make it plausible that, during your previous work period, you met the then-applicable conditions for the tax benefit

I have a PhD or doctoral degree in the Netherlands. Can I get the tax benefit?

Yes. You can use the tax benefit if, 24 months before your Ph.D. research in the Netherlands, you lived more than 16 of the 24 previous months 150 kilometers (as the crow flies) from the Dutch border.

During your Ph.D. research and between getting your Ph.D. and starting your work in the Netherlands, you are allowed to have lived in the Netherlands or within a radius of 150 kilometers from the Dutch border.

Are there any other advantages to the tax benefit?

Yes. In addition to a percentage of your salary being paid tax-free, there are also other benefits:

  • The tax liability benefit and box 3 of your tax return: Currently, under the tax benefit scheme, you can opt for the ‘partial non-resident taxpayer status.’ This means the Dutch tax authority considers you a foreign taxpayer in box 2 and box 3, even though you live in the Netherlands. For box 1 income, you are considered a resident taxpayer under tax law; therefore, you do not pay income tax on assets in boxes 2 and 3 (except for real estate located in the Netherlands and substantial shareholding in a Dutch resident BV), and you are entitled to the partnership ruling in box 1. Note that the amendment will abolish the partial foreign taxpayer status from January 1, 2025. However, employees who make use of the partial foreign taxpayer status in the last period of 2023 will still be able to make use of this tax scheme until December 31, 2026
  • Driving license: If you have a foreign driving license, in most cases, you have to retake the driving test to obtain a Dutch license. However, if you benefit from the tax benefit, you can switch your foreign driving license without retaking the test

What are extraterritorial costs?

Extraterritorial expenses include:

  • Extra costs of living, because the price in the Netherlands is higher than in the country you come from, for example, extra expenses for meals, fuel, water, and electricity
  • Costs for a familiarization trip to the Netherlands, possibly with your family, for instance, to look for a house or a school
  • Fees for applying for or converting official personal papers, such as residence permits, visas, and driving licenses
  • Costs for medical examinations and vaccinations for the stay in the Netherlands
    Double housing costs, e.g., hotel costs (if you continue to maintain accommodation in your home country)
  • Your initial housing costs. If you receive housing, only the first housing costs exceeding 18% of your employment wages are extraterritorial. The rest of the costs are wages
  • Storage costs for possessions that you are not moving to the Netherlands
  • Travel costs to your home country, e.g., for family visits or family reunions
  • Additional costs for having the income tax return filled in if this is more expensive than having the return filled in by a comparable tax consultant in your country of origin. A maximum of €1,000 applies here
  • Language training costs for you and family members staying with you
  • Additional (non-business) call charges for calling your home country
  • The costs of an application for social security exemption, such as an A1 or E101 certificate of coverage
  • You can also get a tax-free reimbursement from your employer for extraterritorial costs for international school fees. It must concern an international school or an international department of a regular school. This is the case if:
    • The education at the (section of the) school concerned is based on a foreign system
    • The school or department is mainly intended for children of expatriate workers

Let Deel apply and calculate the tax benefit for you

Don’t fancy the paperwork? We don’t blame you. Leave it to Deel. 

Foreign employees hired and paid through Deel can benefit from a hands-off approach to the tax benefit application process. 

When your Dutch employer creates your employment contract on the Deel platform, they can indicate “yes” to the “apply for tax ruling?” question. 

You, the employee, will receive an email from Deel kicking off the application process. You’ll be asked to sign an addendum and must provide supporting documentation before we submit your application. 

If approved, you and your employer will receive a granting letter, and we will apply the tax benefit to your payslip. Easy peasy. 

If you have already been granted the tax benefit but are changing employers, we can also assist you in applying the tax benefit to your next employment situation. You’ll need to share a copy of your tax benefit approval document with Deel, and then we’ll help you update your application within three months of the end of your former job.

Sound like a convenient solution? Ask your employer to book 30 minutes with a product expert to get their questions answered and start benefiting from the tax benefit.

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