Some of the most frequently asked questions on the 30 percent ruling answered by Finsens tax advisors.

When am I eligible for the 30 percent ruling?
To be eligible for the 30 percent-ruling the following (cumulative) conditions have to be met:
1.    The employee has to work for an employer due to withholding Dutch wage tax.
2.    Employer and employee have agreed in writing that the 30 percent-ruling is applicable.
3.    The employee has to be transferred from abroad to a Dutch employer or has to be recruited from abroad by a Dutch employer.
4.    The employee has to have specific experience or expertise which is not available or scarcely available in the Netherlands, for example specialists in a specific line of business.

What is the 30 percent ruling?
Being an expat, you may incur more expenses than a Dutch employee. For instance, the costs of living in The Netherlands are higher, or you have double housing expenses. These cost could be reimbursed free of tax by your employer. Your employer would then have to keep track of all the expenses and keep all the receipts. In order to avoid this administrative hassle, the Dutch tax authorities have agreed that, for expats who meet certain requirements, the extra cost the expat incurs are 30 percent of the gross salary. This 30 percent can be paid out as a tax-free reimbursement without proving all the cost by means of receipts. Therefore, the 30 percent ruling is not salary, but it is a tax free reimbursement of expenses.

Do I need to keep all my receipts to prove my expenses?
You do not have to prove the actual expenses made. However, if your actual expenses are higher than 30 percent of your gross salary, the actual amount can be reimbursed tax free. In that case you do have to show proof of the actual costs.

Can I claim any other expenses besides the 30 percent ruling?
The following costs are considered to be extraterritorial costs and covered by the 30 percent ruling:
    Cost of living allowance
    Foreign Service premium/ overseas allowance
    Cost for residency permit
    Double housing expenses
    Home leave
    Language courses

Any other expenses, for instance mobile phone, or travel expenses, can be reimbursed free of tax in addition to the 30 percent ruling. Also, the cost of international schools for your children can be reimbursed tax free, on top of the 30 percent allowance.

How long is the 30 percent ruling valid?
The ruling is granted for a period of 120 months. Any stay in The Netherlands prior to the granting of the ruling will be offset against this 120 month period.

Do I only pay 30 percent tax?
No, you pay the regular tax rates, which run up to 52 percent tax. However, 30 percent of your gross salary is considered to be a tax free. So you will only pay tax on 70 percent of your gross income. This means that effectively, you will never pay a higher rate than (70 percent x 52 percent) = 36.4 percent.

I am an expat; do I automatically qualify for the 30 percent ruling?
No, not every expat is considered to be eligible for the 30 percent ruling. In order to qualify, a number of conditions have to be met.

My employer is not willing to apply for the 30 percent ruling; can I submit the application by myself?
Both employer and employee have to agree in writing on the application of the 30 percent ruling. So in the case of your employer not being willing to cooperate, you will not be able to submit an application.

My employer and I have submitted the application for the 30 percent ruling. Once granted, as of when will it become effective?
Should the application be submitted within four months after the commencement date of your employment contract, the ruling will come into force retroactively till the date you begin employment. If the application is submitted later, it will become effective as of the first month following the month of application.

I do not have much work experience; can I still qualify for the 30 percent ruling?
Specific skills are one of the requirements to qualify for the 30 percent ruling. Technically speaking, specific skills could be present even without work experience. The tax authorities do tend to focus on the previous work experience (they assume 2.5 yrs relevant experience as a minimum). No previous work experience does mean you have a tougher case proving you meet the requirements.

I am changing employers, is the ruling still applicable?
Should you change employment you and your employer have to submit a new application for the ruling. For this new employment you will also have to prove you meet all the conditions. Furthermore, the period between jobs cannot be more than three months. If it takes you longer than three months to find a new job, the tax authorities assume you are not skilled enough to be eligible for the 30 percent ruling.

I have been in NL for a couple of years, but never had the 30 percent ruling, can I still apply?
 If you can prove you met all the requirements of the ruling at the time of arrival, you may still be able to submit a successful application for the 30 percent ruling. However, your previous stay will be taken off the maximum duration of the 30 percent ruling of 120 months.

Can I claim unemployment benefits and still have 30 percent ruling?
If you are made redundant, you may be eligible for unemployment benefits. However, the 30 percent ruling applies only to income from employment, so it will not be applicable to your unemployment benefits. Should you find a new job within three months after being made redundant, you can submit a new application for the 30 percent ruling.

Is the ruling applicable on my bonus?
The 30 percent ruling is applicable to all income from employment (except redundancy payments), so also to your bonus. Should you have been working for an international company and have worked outside the Netherlands prior to your arrival, it may be that the bonus you receive is also applicable to your work abroad. In that case the bonus has to be calculated pro rata.

Is the 30 percent ruling applicable on the taxable private use of my company car?
The 30 percent ruling is applicable to all taxable components of your salary slip, so also on the taxable private use of your company car.

I am being made redundant and will receive a redundancy package, is the 30 percent ruling applicable on the package?
No, a redundancy payment is not considered to be income from active employment and therefore the ruling is not applicable. In some cases a lump sum payment is made, that also includes vacation days and a bonus. It is important that you have a breakdown of the lump sum payment so that the 30 percent ruling can still be taken into account on those components of the payment.

Do I have to do a Dutch driver’s test?
You can use your foreign driver’s licence for a certain period in the Netherlands, but eventually, you are obliged to have a Dutch one. If you are a citizen of the EU or if you are from a country for which special regulations apply, you can change to your foreign driver’s license to a Dutch one. Others will have to take a driving test. When you benefit from the 30 percent ruling, you can change your foreign driver’s licence to a Dutch one, without taking the test.

Is the ruling also applicable to my partner’s income?
No, the 30 percent ruling is a personal tax ruling. So in case your partner also meets all the criteria, an individual request for the 30 percent ruling has to be submitted.

Will the ruling have any implications on social benefits?
The consequence of the 30 percent ruling is that your gross salary is reduced by 30 percent. This 30 percent is then paid out as a tax free reimbursement. Any social benefit is based on your gross salary, not on other components of your salary. Should you qualify for a social benefit such as unemployment benefits or disability benefits, these benefits will be based on the lower gross salary. However, social benefits are maximised up to a certain level of income, so it is likely that you will still receive the maximum social benefit available.

Does the 30 percent ruling affect my pension rights in NL?
It does (or it does in most cases). The pension benefits granted by your employer are based on your taxable salary; thus lower since the “top” is taken off as a tax free reimbursement.

I have the 30 percent ruling but I want to quit my job and become self employed, can I keep the 30 percent ruling?
The 30 percent ruling is only applicable to employment income. If you decide to become self employed, you are no longer in employment and consequently, the 30 percent ruling is no longer applicable.

Is it possible to obtain the 30 percent ruling when I work through my own B.V.?
The 30 percent ruling is applicable to employment income, so in case you work through your own B.V., or any other legal entity comparable to a B.V., the 30 percent ruling can be granted on the employment contract you conclude with your B.V. However, keep in mind that you still have to meet the requirements regarding specific skills.

I had the 30 percent ruling, but I am currently unemployed. Is it possible to apply for the 30 percent ruling when I have a new job?
The period in between jobs cannot be more than three months. If you are unemployed for more than three months, you will not be able to claim the 30 percent ruling for a new employment situation

I lived in the Netherlands a couple of years ago. Now I have been offered a job in The Netherlands. Will my previous stay jeopardize the 30 percent ruling application?
The 30 percent ruling is applicable for a period of 120 months. Any previous stays in the Netherlands will be deducted from these 120 months. If you have stayed in the Netherlands over the past three years, you will receive the ruling for a period of 84 months.

What does partial non residency mean?
When benefitting from the 30 percent ruling, you have the option to file your tax return as a partial non resident. This means that for tax purposes, you will be considered a resident for Box 1 (income from work and dwellings), but a non resident for Box 2 (income from substantial shareholding) and Box 3 (income from savings and investments). The exception to this rule is that Box 2 income from a Dutch based entity and Box 3 income from real estate located in the Netherlands does have to be reported.

I have completed my Dutch tax return, and reported my Box 3 income. Can this be undone?
Should you have filed your return and declared all your savings and investments, you will receive a tax assessment from the tax authorities. If you do not object within six weeks, the assessment is final. However, the partial non residency is a choice that can be made each year, so for the following year, make sure not to include your savings and investments.

I have US nationality, why do I need to register my foreign workdays?
As a US national with the 30 percent ruling, you only pay tax on Dutch workdays. If you have worked for 200 days in a year, of which 100 are in The Netherlands and 100 elsewhere, you only pay tax on the 100 Dutch days. The downside of course is that US taxes are levied on the basis of nationality, not residence; you have to report all your income in your US tax return.

This information was supplied by Finsens Financial Services.
www.finsens.nl