30% Ruling

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What does the 30% ruling mean?

In employment, the employer can reimburse the extraterritorial costs of the employee tax-free. To be able to do this the employee must hand over all the receipts and the employer must check and approve them. This can lead to a lot of work, especially if more employees are in a similar situation. To make it easier employers and employees can request the tax office (foreign tax office in Heerlen) to grant the 30% ruling to the employee for his activities for the employer. This way the employer can, once granted, pay out a tax-free allowance of (roughly said) 30% of the salary of the employee. The 30% allowance will be included in the salary in such way that the costs for the employer will not be higher, while the employee has a higher net salary. The allowance will therefore not be paid on top of the earlier agreed gross salary. If a net salary agreement was made then the benefit will go to the employer.


The expatriate must be an employee who is hired in another country by an employer or sent to an employer within the same group of companies at management level, with a specific expertise that is scarce or absent on the Dutch job market.

Remuneration and provisions to extraterritorial employees to compensate or prevent expenses outside the country of origin shall, with respect to employees arriving at the joint request of the employee and the employer, in any case, be considered remuneration for extraterritorial expenses up to (proof scheme):

  1. 30% of the basis, this being the sum of the wage (including bonuses etc.) received associated with the stay outside the country of origin to the extent the entered or transferred employee has no right in this regard to prevent double taxation, and remuneration for extraterritorial expenses;
  2. the amount of the tuition fees. Tuition fees are payments for children of the extraterritorial employee to participate in primary or secondary education at international schools and international departments of non-international schools, up to the amounts charged by the school according to its rates for education, with the exception of costs and accommodation expenses but including travelling expenses.

It’s not allowed to split the gross salary mentioned in the employment agreement in a taxable part of 70% and a non-taxable part of 30%. Instead the gross salary must be reduced to 70% on top of which a tax free remuneration of 30% can be paid. Consequence is that all the rights based on the gross salary will be reduced too like pension and social security.

Specific expertise

For the evaluation of whether an entered employee possesses specific expertise that is scarce or absent on the job market in the Netherlands, account shall be taken of the interrelationship of the following factors, to the extent relevant:

  1. the level of education of the employee;
  2. the experience of the employee relevant to the position;
  3. the salary of the function concerned in the Netherlands in comparison to that in the country of origin of the employee.

An employee of middle management or higher of an international concern with at least two and a half years experience in that concern who is sent in the framework of job circulation to the Netherlands shall be considered to have specific expertise that is scarce or absent on the job market in the Netherlands.


For entered employees the term of the proof scheme is a maximum of ten years, starting on the first day of employment by the employer.

Change of employer

Should an entered employee have another employer during the term, the proof scheme shall remain in force at the joint request of the employee and the new employer for the remainder of the term, providing the period between the end of employment by the former employer and the start of employment by the new employer is no longer than three months.

For such a request the new employers shall demonstrate anew that the employee is to be designated as an entered employee.

After 5 years proof required

Should the entered employee no longer possess specific expertise that is scarce or absent on the job market in the Netherlands, the term shall be reduced to the time this situation arises but be no less than five years.

Starting the sixth year of the term the tax inspector may require the employer to demonstrate that the employee must still be considered an entered employee.

Should the employer demonstrate as from the sixth year of the term that the employee should at that time still be considered an entered employee, section two shall no longer apply for the remaining term.

Prior stay in the Netherlands

Should an entered employee have worked or stayed in the Netherlands prior to the start of employment, the term shall be reduced by the periods of prior employment and prior stay.

Periods of prior employment and prior stay that terminated more than fifteen years before the term of employment shall not be taken into account.

Abroad Experience International Recruitment wishes you the best of luck with your Dutch life settlement!

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