The 30% ruling
- Extraterritorial costs
- Appendix: Application procedure 30%-ruling
- Access to the webapplication 30%-ruling
Dutch tax legislation provides a special facility for employees attracted from abroad who possess a special expertise that is scarce or cannot be found on the Dutch job market: the 30% ruling. Under this ruling, the employer can provide up to a maximum of 30% of the gross salary to the employee as a tax-free cost allowance. Tax-free in this context means that the employer does not withhold any payroll tax and social security contributions from the allowance.
The 30% ruling is meant as a compensation for necessary extra costs in connection with the acceptance of (temporary) employment outside of the own country of residence: these so-called “extraterritorial costs”.
The University of Twente has placed the 30% ruling under the Optional Model Employment Conditions. This means that if you make use of this ruling, you exchange part of your gross salary for a net cost allowance: the 30% ruling. This results in a higher net salary.
The advantage for you if you take up the 30% ruling under the optional model is that a reduction of the pensionable earnings is not required. You accrue pension over the salary that would be applicable to you without applying the 30% ruling.
To be eligible for the 30% ruling you need to meet several conditions. Moreover, making use of the 30% ruling will have consequenses for other employment conditions and your entitlement to social security.
Click here to start the application process for the 30 % ruling.
Once you have stated your request to start the application process, your access to the Optional Model Employment Conditions 2017 (simulation model) is blocked.
If in your situation the Tax Administration does not agree with application of the 30% ruling, you still get access to the option model up to and including 30 September 2017.
These so-called “extraterritorial costs” consist of, among other things:
- Extra costs of maintenance due to a higher cost of living in the country of employment than in the country of origin, such as extra costs for meals, gas, water and electricity (cost of living allowance).
- Costs for getting acquainted with the country of employment, possibly including the family, for example for finding a house and/or school.
- Costs for applying for or converting official documents, such as residence permits, visas and travel licences.
- Costs for medical checks and vaccinations for a stay in the country of employment.
- Double accommodation costs if the employee continues to live in the country of origin, for example hotel costs.
- The (initial) accommodation costs if and insofar as these exceed the ordinary accommodation costs. Ordinary accommodation costs are considered to amount to 18% of the income from current employment. The excess is considered to be extraterritorial costs.
- Storage costs for any household effects that are not moved to the country of employment.
- Travelling costs to the country of origin, for example to visit relatives or for family reunification.
- Extra costs for having the income tax return completed as a result of being posted to the Netherlands.
- Costs of courses for language courses of the country of employment for the employee and the family members staying with him.
- Extra (non-business) telephone costs for calls to the country of origin.
To be eligible for the 30% ruling you need to meet the following conditions:
This calendar year you didn’t make use of one or more of the other exchange options in the Optional Model Employment Conditions.
you are not eligible to the 30%-ruling in an optional year if in that year you have already made use of one or more of the other exchange options in the optional model. Once you have definitively recorded a choice in the Optional Model Employment Conditions (simulation model), your access to the web application (DPR) for applying for the 30%-ruling will be blocked.
At the moment on which you submit an application for the 30%-ruling to the Group Directorate Personnel Department, the remaining duration of your employment is at least 11 months.
The application procedure will take a total of about four months. Because the procedure is labour-intensive for the employer, the university sets the condition then the employment continues for at least another 11 months.
You have been recruited from a country outside the Netherlands
At the moment on which you entered into an employment contract with the university, you were not living and working in the Netherlands.
The 30% ruling can also be applied if immediately prior to the start of your employment with the UT you were employed by another Dutch employer where you made use of the 30% ruling. In this situation you can continue to make use of the 30% ruling if and insofar as the maximum term of the tax ruling of the Tax Administration (10 years) has not yet expired. In this situation you will have to re-apply for a tax ruling, along with your new employer (UT).
You meet the 150 kilometres criterion
In the period of 24 months immediately prior to the start of your employment with the University of Twente, you lived at a distance of more than 150 kilometres from the Dutch border during more than 16 months.
You are a member of the UT’s academic staff and you entered the employment of the UT on or after 1 January 2016
Starting from 1 Januari 2012 the Tax Administration automatically assumes that scientists at universities (employees with a UFO profile starting with 01) have a specific expertise that is hardly if at all to be found on the Dutch job market. For scientists who have been employed before this date, the Tax Administration takes into account other factors in assessing the scarcity and expertise requirement.
Your salary is taxed in the Netherlands
For application of the 30% ruling it is not necessary that you reside in the Netherlands. However, the salary for which the 30% ruling is used must be taxed in the Netherlands on the basis of a bilateral tax treaty. If on the basis of the tax treaty your salary can only be taxed abroad, the 30% ruling cannot be applied.
In your situation the Tax Administration consents to application of the 30% ruling
The 30% ruling can only be applied after the Tax Administration has issued a tax ruling. Both the university and yourself must apply for this tax ruling together, at the Tax Administration Limburg/Department of International Issues. If the tax ruling has been applied for within 4 months after commencement of your appointment in the Netherlands, the 30% ruling can be granted with retroactive effect until the date of commencement of the employment. If the application is filed at a later moment, the 30% allowance can only be granted on the first day of the month following the month in which the application has been filed with the Tax Administration.
The maximum period for applying the 30% ruling has not expired
The 30% ruling can be applied up to a maximum of 8 years. If the application has not been filed within 4 months after commencement of your employment in the Netherlands, this term will be reduced by the period already lapsed between the moment of commencement of employment and the moment on which the application has been filed.
The total duration of the 30% Ruling (8 years) will also be reduced by the period you lived or worked in the Netherlands during the 25 years immediately prior to your employment with the University of Twente.
Making use of the 30% ruling has a number of additional effects for you, including:
a. You cannot use the other exchange options under the Optional Model Employment Conditions.
b. You are not entitled to compensation of costs that are considered as extraterritorial costs, such as a tax-free allowance for the costs of double accommodation.
c. If the University of Twente, prior to or during the application procedure for the 30% tax ruling, has reimbursed costs that qualify as extraterritorial costs (for example administrative charges), on applying the 30% tax ruling these will be settled with your holiday allowance, year-end bonus and/or salary over the month of December.
d. You do not qualify for a labour market allowance in the sense of Article 3.14 CAO NU (Collective labour agreement Dutch universities).
e. No premiums for employee insurance (WW; unemployment benefit, WIA; benefit under the Work and Income according to Labour Capacity Act) are levied over the tax-free expense allowance (30% ruling). Consequently, any future benefits will be lower.
f. After expiry of the period in which the 30% ruling is applied, your net income will drop. You are not entitled to any allowance resulting from this fall.
g. The one-off costs of the application procedure (to a maximum of €300) are for your account. This amount is settled with your net salary in three instalments.
h. The 30% tax ruling is calculated over your monthly salary, holiday allowance, year-end bonus and other special remuneration components (for example a bonus).
Appendix: Application procedure 30%-ruling
- Staff members who believe they meet the conditions for application of the 30%-ruling, can apply to the Group Directorate Personnel Department via a web application.
- The salary administration will make a rough assessment as to whether it is useful to start the application procedure. For example, they will examine whether immediately prior to his or her employment, the staff member lived and worked abroad for an extended period of time.
- If it proves to be useful to start up the application procedure the salary administration collects all necessary documents and completes the application for the Tax Administration. If necessary, KPMG/Meyburg is asked to assist in this context.
- The salary administration invites the staff member to sign the application for the Tax Administration.
- After receiving the decision from the Tax Administration, the salary administration informs the staff member and the faculty of this.
- In the event of a positive decision from the Tax Administration the ruling is granted from the effective date of the decision. The salary administration will see to the administrative processing.
- In the event of a negative decision, the “regular” Optional Model Employment Conditions will be made open again to the staff member.
The Dutch text of this regulation is binding. In case of a difference of interpretation, this translation cannot be used for legal purposes.