This tax advantage, part of the Dutch tax system, allows up to 30%  of the employment income to be paid out tax-free. For those planning to relocate, the 30% facility - which is also known as the ‘30% Tax Ruling’ - can significantly influence their financial decisions. This article will guide you through what the ruling entails, who is eligible, and how to apply. 

The path to qualification 

To qualify for the 30% tax ruling, an individual must meet specific criteria set forth by the  
Dutch tax authorities. These criteria include being recruited from abroad or being transferred to the Netherlands from another country by an employer. 

Additionally, the individual must have lived at least 150 kilometres away from the Dutch border for at least 17 of the 24 months prior to the start of employment in the Netherlands. 

Furthermore, a salary criterion needs to be met. For 2024, the taxable salary must be at least € 46.107 a year (after taking out the tax-free part). For individuals younger than 30 years old with a Master's degree evaluated as similar to a Dutch Master's degree, the taxable salary must be at  
least € 35,048 a year (2024 figure, after taking out the tax-free part). 

The ruling applies for a maximum period of five years and no extension is possible. It needs to be determined whether periods spent in the Netherlands during the last 25 years prior to the start date of the employment in the Netherlands (both for business as for personal purposes) will be deducted from this 5 years period. This consideration includes times when individuals may have lived in the Netherlands intermittently. The key point is whether these stays, regardless of their purpose or continuity, affect the total applicable duration of the 30% ruling. 
 
It is important to note that not all applicants are automatically granted the ruling, and each case  
is subject to review by the Dutch tax authorities.

Understanding the required documentation

Before applying for the 30% Tax Ruling, individuals should gather the required documentation, including (amongst others) employment contracts, resumes, and proof of place of residency during the last 24 months prior to the employment start date in the Netherlands. It's essential to ensure  that all documents are accurate and up to date. An application will need to be filed with the tax authorities by both the employer and the employee.  

To qualify as an entrepreneur

To qualify for the 30% Taxation ruling as an entrepreneur in the Netherlands, individuals have two main options for their business structure: a sole proprietorship or a limited liability company (B.V.). 

Sole Proprietorship: Operates with simplicity but is subject to higher annual taxes on all profits. Eligible for tax benefits like the small companies discount and the self-employed tax deduction. 

Limited Liability Company (B.V.): Offers greater tax advantages, including potential eligibility for the 30% ruling, but entails additional obligations such as monthly payroll and quarterly VAT filings. Shareholders must receive a minimum salary to benefit fully from the ruling.

Professional guidance matters 

Navigating the application process and meeting eligibility criteria can be complex, demanding thorough preparation and expert guidance. Consulting with a tax advisor or immigration specialist can provide clarity on any inquiries and ensure all requirements are met prior to submitting the application. In the case of the latter, RSH | Relocation and Immigration Services offers tailored Taxation support.