30% ruling from 1 January 2021
As of 1 January 2019, the 30% ruling and its conditions have been subject to a significant number of changes. The main change is that the duration has been shortened to a maximum period of five years for new applications as of 1 January 2019. From 1 January 2021, few changes have been made, only the salary standards have been indexed.
Transitional arrangement 30% ruling
A transitional arrangement still applies to employees who have been granted the 30% ruling with a start date before 1 January 2019. In the overview below you will find the restrictions on existing 30% rulings with an effective date before 1 January 2019 and the new end dates in accordance with the transitional law. This has resulted in the end of numerous 30% rulings with an end date prior to 1 January 2024 as per 31 December 2020.
|End date on the decision||New end date transitional arrangement|
|2019 and 2020||End date on the decision|
|2021, 2022 of 2023||31 December 2020|
|2024 or later||End date on the decision minus three years|
Partially foreign taxpayer due to 30% ruling
An additional tax benefit of the 30% ruling is that the employee can opt for treatment as a partial non-resident tax payer for the maximum period of five years as long as the 30% ruling is valid. As a result, the taxpayer can choose to be treated as a foreign taxpayer for income from a substantial interest (Box 2) and income from savings and investments (Box 3). As a result, the employee is only subject to tax on income from specific Dutch sources, namely a substantial interest in a Dutch company for Box 2 or Dutch real estate that is not the employee’s residency for Box 3.
School fees for international schools and the 30% ruling
In addition to the application of the 30% ruling, an employer may grant a tax-free allowance to the employee for fees for international schools or for an international department of a regular school for children of an expat. For such school fees, the maximum duration for tax-free reimbursement is also set at five years in accordance with the duration of the 30% ruling.
Salary requirements of the 30% ruling
From 1 January 2021, the indexed salary thresholds, which demonstrate specific expertise for the application of the 30% ruling, have been determined as follows:
- € 38,961 taxable annual wage (excluding the tax-free allowance of maximum 30%) for employees aged 30 and over;
- € 29,616 taxable annual wage (excluding the tax-free allowance of maximum 30%) for employees younger than 30 with a Dutch or equivalent foreign master’s degree.
We would like to note that the above mentioned salary criteria are applicable to new applications (as of January 2021), but also to existing cases. It is a continuous condition which should be met. In principle every employee who has been granted the 30% ruling which is valid during 2021 must meet the salary criterions as outlined above.