Posted by Nick Day on 04 Sep 2012

Netherlands 30% Ruling Changes for 2012

From 2012 onwards, new restrictions apply on the 30% ruling – a tax break for “expats” working in the Netherlands.

The 30% ruling in general means that 30% of your gross earnings may be exempt from Dutch taxation. This ruling makes the Netherlands a potentially attractive location to be based in for expats from outside the country who move to work there. Without this ruling the Dutch tax rates are much less attractive!

The Dutch Finance Ministry denies this ruling to EU residents living within 150 km of the Dutch border. One of the requirements for the 30% ruling is that the employees are directly recruited from abroad. However, EU-residents living within 150 km of the Dutch border will no longer qualify for the 30% ruling.

This basically rules out Belgium entirely and part of Germany. Even some of the UK is within 150 km of the Netherlands! This is hardly conducive to the free movement of people within the EU. A court case is already in development to contest this alleged discrimination.

Furthermore a minimum income requirement was introduced and only people earning more than €50,000 a year will qualify. The minimum salary to qualify for the tax break will now be €35,000 – or €50,000 gross before the 30% exemption/ruling.

The Dutch Finance Ministry had originally ruled that only those individuals earning over €50,000 – effectively €70,000 before the 30% exemption/ruling – would be eligible.

A lower income requirement for PHD graduates is introduced. The minister has also cut the salary limit for young ‘Masters’ at the beginning of their careers to €38,007 gross before the 30% exemption/ruling. To qualify, the worker must be below the age of 30.

The new regulations find their origin in the sharp increase in 30% rulings granted over the last decade and accordingly the Dutch Government believes that the rules need to be tightened up.

Other changes also apply but are complex and details are better discussed with a qualified Dutch tax adviser.

Tax Innovations works closely with such an adviser – TaXpatise Expatriate Tax Services – so please contact us if you require any advice regarding your Dutch tax affairs and need to be put in touch with TaXpatise.