Taxes in the Netherlands

Expats who work in the Netherlands, or perform other activities that are liable to taxation in the Netherlands are subject to Dutch income tax, either as resident or non-resident taxpayer, but there are special compensations. Temporary stay in the Netherlands will often cause significant additional relocation costs. Because it may be difficult for the immigrant to prove the deductibility of these expenses the Dutch tax authorities issued the 30% ruling.

Tax rules for expats in the Netherlands

In this tax measure these additional costs are defined as "extraterritorial costs" and can be compensated as follows:
  • up to the amount of actual costs (which have to be substantiated). If this option is chosen, the worker qualifies as an "extraterritorial employee" and then will be paid a compensation for the extra territorial costs
  • as a fixed and tax free allowance of up to 30% of the gross taxable income (without having to provide further evidence), which is called the "30% rule".

To get approval it is required that the employee
  • was recruited from abroad
  • has special skills or knowledge not readily available on the Dutch labor market
  • followed higher education
  • has sufficient work experience relevant to the position or job in the Netherlands (in general 2.5 years is sufficient)
  • The level of remuneration for employment in the Netherlands should comply with the compensation package you receive, if not benefitting from the 30% rule.

The contract of the expat should refer to the 30% rule. The application for the ruling is a mutual request of the employer and the employee and must be submitted to the tax authorities in Heerlen within four months after the start of employment activities in the Netherlands. Initially the 30% rule will be granted for a period of 120 months.

The 30% tax rule should be applied correctly and on time, otherwise there is a chance that the employee cannot cash the tax benefits. Ask our associated tax partner HKS for a quote to apply for your 30% tax rule!