The 30 Percent Rule (NL)

The 30 Percent Rule

The 30 Percent Rule is a personal income tax reduction for select employees in the Netherlands. It applies to specialized foreign employees who are brought to the Netherlands because their skills are scarce in the Dutch marketplace. The scarcity of work force with particular skills is reviewed annually "The 30% rule".
The purpose of the 30 Percent Rule to compensate employees for the extra costs of their temporary stay in the Netherlands. The effect is to make the Netherlands competitive in the international marketplace for skilled labour, since normal Dutch income tax rates are high (in comparison with other countries) and may discourage some employees from accepting assignments in the Netherlands.
However, there are consequences for possible future unemployment aid, tax deduction for a mortgage and other benefits.
The 30 Percent Rule allows an employer to exempt from income tax up to 30% of the employee's annual remuneration (the "Basis") and used to be applicable for the first 10 years of their stay in the Netherlands Inkomstenbelasting Wet 2001.
New legislation, is in force from 1 January 2012. By new legislation, period is shorted from 10 years to 8 years, with 5 year transition period. Also, foreign students acquiring PhD in the Netherlands are eligible for 30% ruling, even though they were not hired from abroad "Changes in 30% rule".
The Dutch tax authority allows for two options:

• 30% tax-free is reimbursed based on registered receipts for extraterritorial costs (e.g. maintenance of an own house in the country of origin, travel expenses, relocation costs, language courses, long-distance telephone calls)
• the Dutch tax office can upon an approved application of an employee grant 30% tax exemption on the employees remuneration.

In addition, the employer may provide a tax-free reimbursement of the fees paid for the employee's children to attend an international school.
The Dutch income tax law does not, however, specify, how will the benefit of the 30% rule be divided between the employee and his/her employer. Some employers (e.g. Shell B.V.) have stipulated in their general working conditions that the 30% rule benefit is solely for the benefit of the company arguing that salaries of their local workers would not be on par with their foreign work force.
A similar rule also applies to compensate Dutch employees who are assigned to work in designated developing countries or to the Dutch nationals returning to the Netherlands after a substantial period of living abroad.
Note that it typically takes two to three months from the application for the rule to be granted. The excess tax paid in the meantime is repaid to the applicant once the rule is granted.

See also

• Corporate Tax in the Netherlands
• Taxation in the Netherlands
•  

http://en.wikipedia.org/wiki/Income_tax_in_the_Netherlands