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The Netherlands has a special tax regime for expatriates, the so-called 30% ruling benefits, which provides a substantial income tax exemption of up to 30%, for a period of up to 120 months. This 30% ruling pension is viewed as a reimbursement for the extra costs involved in living abroad.

• According to this rule, the employer may grant the employee a tax-free allowance of up to a maximum of 30% of his or her remuneration. The remuneration includes incidental and flexible forms of income such as bonus payments and stock options. Termination and pension payments are excluded.
• In order to qualify for the 30% ruling, the following conditions must be met:
• The employer must make a reasonable case that the employee possesses specific expertise that is not available, or is scarce in the Dutch labor market
  • The employee must be recruited from abroad
  • The employer must be a Dutch wage tax-withholding agent
  • The exemption is available for a period of 10 years (120 months).
• After a period of five years, the tax authorities can request that the employer demonstrate that the employee still meets the conditions.

Calculation pension contribution employee (dutch)

Calculation defined contribution scheme

Pension accrual and the 30% ruling pension

If certain conditions are met, expatriates may be eligible for the 30% ruling. This arrangement means that there is a tax-free allowance which will be given up to 30% of wages. The tax free fee is for the extra cost of the temporary residence of the expat in the Netherlands. This allowance is tax not paid.

In principle you usually do not build up pension on the tax-free reimbursement of the 30% ruling. The pension benefits granted by the employer are based on your taxable salary; thus lower since the “top” is taken off as a tax free reimbursement.

The main rule is that the 30% reimbursement gives no accrual pension. The 30% ruling pension consequences can be complicated. A correct pension scheme solution is possible. Due to the 70% level of pension salary the widows and orphans pensions are also 30% lower. This gap is easily compensated with a private life insurance. Several other solutions for the 30% ruling pension problems are possible.

If you think I might be able to help you of your business with the 30% ruling pension:

Gerrit-Jan Doorneweerd, registered Pension Advisor,
Amsterdam, +31 (0)20 6200825
Mobile, 0651 471 9 – six – five. (Also in the evening and weekends.)
Please give me a call or fill in the form.

Information and Calculations

Tax calculator

An application that accurately calculates an indicatio of the benefits of the ruling

Video

• “I started to slow down but the traffic was more stationary than I thought.”
• “I pulled into a lay-by with smoke coming from under the bonnet. I realized the car was on fire so took my dog and smothered it with a blanket.”
• Q: Could either driver have done anything to avoid the accident?
  A: Travelled by bus?
• This Norwich Union customer collided with a cow. The questions and answers on the claim form were:
  Q: What warning was given by you?
  A: Horn
  Q: What warning was given by the other party?
  A: Moo
• “I started to turn and it was at this point I noticed a camel and an elephant tethered at the verge. This distraction caused me to lose concentration and hit a bollard.”
• “On approach to the traffic lights the car in front suddenly broke.”

• “I didn’t think the speed limit applied after midnight”
• “I knew the dog was possessive about the car but I would not have asked her to drive it if I had thought there was any risk.”
• Q: Do you engage in motorcycling, hunting or any other pastimes of a hazardous nature?
  A: I Watch the Lottery Show and listen to Terry Wogan.
• “Windscreen broken. Cause unknown. Probably Voodoo.”
• “The car in front hit the pedestrian but he got up so I hit him again”
• “I pulled away from the side of the road, glanced at my mother-in-law and headed over the embankment.”
• “The other car collided with mine without giving warning of its intention.”
• “I collided with a stationary truck coming the other way”
• “A truck backed through my windshield into my wife’s face”
• “A pedestrian hit me and went under my car”
• “In an attempt to kill a fly, I drove into a telephone pole.”
• “I had been shopping for plants all day and was on my way home. As I reached an intersection a hedge sprang up obscuring my vision and I did not see the other car.”
• “I was on my way to the doctor with rear end trouble when my universal joint gave way causing me to have an accident.”
• “To avoid hitting the bumper of the car in front I struck the pedestrian.”
• “My car was legally parked as it backed into the other vehicle.”
• “An invisible car came out of nowhere, struck my car and vanished.”
• “I was thrown from the car as it left the road. I was later found in a ditch by some stray cows.”

Information and Calculations

For income tax purposes 3 types of taxable income are distinguished. These income types have been classified into 3 so-called boxes:

Box 1: taxable income from employment and home ownership;
Box 2: taxable income from a substantial interest;
Box 3: taxable income from savings and investments;

Box 1:

• Taxable income from employment and home ownership;
• Wages, pension payments, social benefits;
• Income from other activities;
• Company car;
• Profits from business activities;
• Owner-occupied property;
• Negative expenditure on income insurance;
• Negative personal allowance;
• Periodic benefits.

Deductible expenditure in Box 1:

• Employee’s allowance
• Deduction of mortgage interest and other deductible expenditure;
• Expenditure on income insurance: annuities and other premiums;
• Offsettable losses from employment and home ownership;

Tax rate in box 1:

• Progressive, with a maximum rate of 52%

Box 2:

Sometimes news turns into old news within a few days. Two days ago we blogged hereabove that the the beneficial entitlement to pension accrual for tax purposes (deferred taxation system) can only be applied to a pensionable salary up to a maximum of €185,000. This now will not be implemented has been decided yesterday. For more info read this article. Unfortunately it’s only available in Dutch for the moment.

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