The 30% Ruling Application

Explanation of the ruling

The 30% ruling is for expat employees with a highly recommended skill set. The 30% ruling is an advantage on the salary where 30% of the normally taxed salary will now be paid non-taxed to the employee. For example: he or she earns gross EUR 10.000,00, you will get EUR 3.000,00 Euro non-taxed and EUR 7.000,00 Euro will be taxed as normal.

The regulation states that the employer may reimburse 30% of the gross wage in addition to the regular wage amount as compensation for the extra costs incurred by working or moving to the Netherlands. It is not important whether these costs are actually incurred, the allowance is a lump sum.

Who is Eligible?

There are some requirements from the Tax Authorities to determine if your employee would be eligible for this application:

• He or she needs to be recruited from abroad;
• During the past 24 months, 16 of those months must be lived outside (150 kilometres from the border) of the Netherlands;
• The experience and education skills are important. Not everyone with the required 30% salary can receive the 30% ruling on his/her salary. Please click on this link to find out the current salary requirements;
• If he of she is younger than 30 years, he/she will need to prove that he or she has obtained a Master’s degree to be able to get the 30% ruling.

Recruited from abroad

Recruited from abroad means that at the time of signing the agreement between you and your employee, the employee is not physically in the Netherlands. Most of the time you as an employer would like to sign the agreement at an office or together in person. At this time the confirmation that you will hire this person and that you both agree with all the terms and conditions needs to be proven/stated and the employee needs to be in a country other than the Netherlands.

How can we apply for the 30% Ruling?

A tax advisor, the employee or you as an employer can apply for this arrangement. At the end of the process the employer needs to approve the application. Most of the time the employer, or your  tax company files the application for the employee.

In 6-7 weeks, the applicant will receive the granting letter if all is submitted correctly. Over the next 5 years of the employment, the employee can use the 30% ruling on their salary. The applicant needs to apply within 4 months of the first start date of an employment in the Netherlands.

Payroll administration

For you as an employer it is important to have a copy of the granting letter from the Tax Authorities in your files to determine if it applicable and to be aware of the duration.

It could be that the employee earns less than the required income, it could be that the 30% ruling does not apply to the employee at all, or that it does not cover the full 100% of the income. Either way it is important to inform the payroll administrator about the 30% ruling so it can be processed in the correct way in the administration.

Also an extra agreement with the employee in regards to this application is important to have. We advise to add an extra clause in the employment agreement.

Apply for the 30% Ruling with TOSS

If you use our payroll services, TOSS will act on your behalf as the legal employer for your employee. We will apply for your employee, and making sure that you and the employee receive all the benefits that are applicable in your particular situation.

At this point there is nothing we need anymore from you. We will contact the employee directly and will request all necessary information. Of course we will inform you in the process.

There are two options:

1. Maybe the employee that you will hire already has a job in the Netherlands and their current employer has processed the 30% ruling. In this case, we will transfer the 30% ruling to our account so that we can make sure the employee is getting the most out of this benefit. We will process the 30% ruling in the salary administration. To change from one employer to another, this needs to be done within the 3 months stated after the contract with the previous employer ended to continue the benefits. We require some documents from the employee to be able to accurately process an application for you:
   • the 30% Ruling granting letter;
   • payslips from the former employer;
   • additional documents to prove the requirements that are mentioned earlier in this article.
2. In the case that the job with TOSS will be his or her fist job in the Netherlands, we will file a new application with the Tax Authorities the first time for the employee. In this case we will need some additional documents like are mentioned above. However, since their first job is with us, we already have most of the documents we need in our files.

Tax advisor

Maybe after this article you understand the difficulty about this application a little bit more. Although we at TOSS are very experienced in these applications we also hire a tax advisor to apply for us. Not only to make sure we do it in the correct way, but also because they have a special arrangement with the Tax Authorities so we could have the granting letter earlier then the 6-7 weeks.

Process of the 30% ruling

Most of the time the start date is already passed when we receive the granting letter. Since it is logical that the employee would like to receive his salary immediately, we process the salary in the period until receiving the granting letter without the 30% ruling.

Once we have the letter in our possession we process the 30% ruling retroactively from the start date of the employment agreement.