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30% Ruling - Get Yourself a Major Tax Break and Move to Holland!

The 30% ruling is by far one of the biggest financial deal breakers for which an expat to say “yes” to moving to Holland. This tax incentive was first introduced in 2005 as a means of attracting highly skilled migrants to The Netherlands. The 30% ruling is renewable once for a period of up to 10 years (two periods of 5 years). The justification for the 30% ruling is to cover the extraterritorial costs that come about when moving abroad (ex: relocation, tickets etc..) . In order to qualify for the 30% Knowledge migrant program (kennismigrant in Dutch) one must meet the following criteria:

  1. Earn at least 36,801euros per year if under the age of 30 and at least more than 50,183 per year if above the age of 30 (The salary requirements is not applicable to people teaching at the university level and to postdocs).

  2. Must be working for an employer that has met the criterion for being allowed to hire a knowledge migrant. See here for a list of these employers.

  3. NO criminal record. That means NO felonies if you are a U.S. Citizen.

  4. Valid Passport

If you manage to get into a company that has not filed for the 30% ruling it’s definitely a good idea to try and get them rolling on that. You may want to ask during the interview phase if they have applied for it. If not, well, that could be your first project for your new found employer. Keep in mind this may be hugely beneficial for them as it will aid in the recruitment of badly needed foreign highly skilled human capital.

Spouses and partners of knowledge migrants are exempt from requiring work permits and are automatically able to work on the Dutch labor market. However, they are not eligible for the 30% ruling unless they qualify.

Once you are approved for the 30% ruling the company applying for you will apply for your long-term residence permit. This is usually granted for a period of 5 years. Once the 5 years are up you must renew it for another 5 years. You may also choose to become a Dutch citizen. However, keep in mind you will most likely need to renounce your current nationality, seeing as The Netherlands does not recognize dual citizenship. This does not apply if you get Dutch Nationality through marriage. Once you get your residence card you must keep it on you at all times, especially when passing through Schengen border checks.

Here is how the 30% ruling works in practice. Assuming you earn a Salary of 100K EUR (including housing allowance + perks which is a huge salary but a round easy number to work with) the 30% allows you to deduct 30% of your gross income absolutely tax free. The remaining amount of your wages will be taxed as follows:

  • · 33.45% on the first 18,218 EUR

  • · 41.95% on the next 14,520 EUR

  • · 42.00% on the next 22,629 EUR

  • · 52% on the remainder

So for our very rich expat example you would calculate your effective tax as follows:

100 ,000 EUR - 30% = 70,000 EUR

18,218 x 0.3345 = 6,093.921 EUR – Tax first bracket

14,520 x 0.4195 = 6091.1400 EUR – Tax Second bracket

22,629 x 0.4200 = 9,504.1800 EUR – Third tax bracket

remainder = 70,000 – (18,218 + 14,520 + 22,629) = 14,633 EUR

14,633 x 0.52 = 7,609.16 = Final tax bracket

Total Tax to be Paid = 6,093.921 + 6,091.14 + 9,504.18 + 7,609.16 = 29,298.221 EUR

Effective Tax Rate is = 29.3%, and you walk away with 70,701.779 EUR per year on a 100K EUR salary. Also, note that your employer will probably make a contribution to your pension that you can opt out of and get cash for directly if you’re not planning on contributing. Also note your employer will usually pay a sum for transportation depending on how far you live from work.

A Dutch citizen whom has lived all of his/her life* in Holland would pay an effective tax rate of 44.898% on a 100K EUR salary. Essentially 53% more tax than an Expat. It simply pays to be an expat! BUT keep in mind Dutch citizens living abroad for a long period abroad, when repatriated, are eligible for the 30% ruling.

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