30 percent ruling

30 percent ruling

30 percent off

Pay less taxes

When you’re interested in jobs in The Netherlands you probably heard about the 30% ruling. For some reason it’s a well-known fact amongst international developers. However; whilst mentioned a lot, not everybody understands this somehow mysterious arrangement.

Relocation expenses

The ruling is simply a reduction on income tax. The Dutch government wanted to make it easy for Dutch employers to hire international talent. Instead of letting employers reimburse relocation expenses and deduct those, the 30% ruling is a generic arrangement so expats are compensated for relocation costs by paying less income tax. The 30% ruling simply means that 30% of your gross salary is untaxed.

How much?

Calculating the benefit is pretty straight forward, if you know how 🙂 The calculation looks like this:

$untaxed_income = $gross_salary * 0.3
$net_income = gross_to_net($gross_salary * 0.7) + $untaxed_income

The gross_to_net() calculation can best be done online since the tax rates change every year: https://www.loonwijzer.nl/home/salaris/brutonetto 

Examples

Gross Net without 30% Net with 30%
€42000 €29815 €35893
€50000 €33884 €41241

So the net benefit can be several thousand euros a year! So be careful comparing gross salaries between countries, salaries in London might seem higher but with the Dutch tax break and lower cost of living it still means you’ll have more money in your pocket.

Employer benefits

Not many people realise that employers also benefit from the 30% ruling. Some social benefits are also calculated from the lower gross salary, which means an expat is cheaper to hire than a Dutch employee with the same salary. It’s a win-win deal for everyone!

Want to know more? Please feel free to contact us!

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