Payroll taxes in the Netherlands

The Netherlands has fairly high payroll taxes. For example, the income tax rate for persons with an annual salary of more than 68.5 thousand euros is 49.50%. But thanks to various tax benefits, the lion's share of earnings (about 75%) still remains at the disposal of the local worker. You can calculate the net average salary in Netherlands using an online calculator here.

Income tax in the Netherlands in 2021

Personal tax credit (for people with low income) in the Netherlands - 2,477 euros. The tax rate on income from savings and investments is 30%. In addition, workers are charged a National Insurance Contribution (27.65%). In some cases, for example, with minor children, the Netherlands provides additional tax incentives to reduce the burden on wage deductions.

So what is the 30% ruling?

Quite simply: 30% ruling, aka 30% regeling, is a tax rebate designed to (financially) make it easier for an expat to move to the Netherlands. The meaning of ruling is, on the one hand, to ease the financial burden of those who, due to a new job, are forced to change their place of residence for the whole family and move to live and work in Netherlands for a long time, and on the other hand, to facilitate the employer's reporting related to expenses for relocation of such an employee. And it is called "30% ruling" precisely because it allows you to receive 30% of your dirty (gross) salary without taxes.

Dutch employers have the option of preferential (tax-free) reimbursement of employee expenses related to moving to work in the Netherlands, the so-called. extraterritorial costs. The company can reimburse such expenses either individually and in fact, i.e. separately for the flight to the interview, separately for the transportation of things, etc.; or the employer can request for the employee the so-called. 30% ruling, thus making it easier for the migrant to financially acclimatize.

Along with a (maximum) 30% tax rebate, getting ruling opens up some other amenities and opportunities, for example:

• Free exchange of driving license for the owner and his family for a Dutch license
• Obtaining the status of a partial full tax resident of the Netherlands

Who can get 30% ruling?

Contrary to the stereotype, 30% ruling is not directly related to the Kennismigrant status and can be obtained by any hired employee who meets the requirements. To get a ruling, there are a number of mandatory criteria that must be met:

• You are an employee (not a company owner) with a work contract
• In the last 2 years prior to your 1 working day in the Netherlands, you:
• Have lived for more than 16 months outside the Netherlands and
• Lived this time more than 150 km from the border of the Netherlands
• A fairly high level of salary
• Or your annual salary subject to tax (i.e. without vacation pay and after deducting 30% tax = 70% of gross salary) is higher than the minimum required by the state for this year.
• Or you are under 30 and have a diploma of higher scientific (not technical!) education (Master, he is a master) and your net annual salary is higher than the minimum required by the state for this year (also without vacation pay and after applying 30% tax rate)

An exception is made by researchers who conduct research in the Netherlands at the relevant research institution - such employees are always entitled to a 30% ruling, regardless of the size of their salary.

How to get 30% ruling?

Rouhling in the Dutch tax office is requested by the employer. Since 2019, a permit for the use of 30% ruling is issued for 5 years and can only be applied by 1 employer for 1 specific employee. That is, when you change employers, your new employer will have to re-request taxis for you. It is advisable to submit a taxi request within the first 4 months after arrival, then you will be able to use it from the very first salary. If you applied for ruling later, it doesn't matter, it is also possible, but it will start to operate only from the date of issue of the final permit.

Do you have any questions?

If you have any question about the 30% ruling don't hesitate to write to us!