The 30% ruling is a tax advantage for incoming employees who are working in the Netherlands. When the appropriate requirements are met, the employer is allowed to grant a tax free allowance amounting to 30 percent of the salary which is subject to Dutch payroll tax. Consequence is that the taxable part of the salary is reduced to 70% and on top of that the 30% allowance is paid so that the total stays 100%. The tax free allowance is considered as compensation for extra territorial expenses a foreign employee has for working outside their home country.
Expatax can assist with the whole application procedure. We are very experienced with the 30% ruling and the application and have many companies as our client for which we take care of all the requests for their employees. In the last 10 years we have filed thousands of applications with a high success rate. Our fees are mentioned on our fee schedule.
The employer can reimburse the extra territorial 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 employer and employee 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 percent 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.
For more more information and answers to frequently asked questions see also our Knowledge Base.