30% Rule for Graduates in the Netherlands?

To qualify for the attractive 30% rule, it is assessed whether the employer has recruited the employee from abroad. Persons who came to the Netherlands for study reasons and found a job may think they are not eligible to obtain the 30% rule. However, under certain circumstances, they may be entitled to it. And as you know, the 30% rule provides the employee with a tax-free allowance of up to 30% of the salary. This results in a substantially higher net salary. At the same time, the employer’s costs are usually lower because fewer employee insurance premiums are due, and the employer’s contribution to the health insurance law is reduced. So interesting for students and future employees and their employers! It all depends on the relevant facts, personal circumstances around the student and timing.

Possible Point of View Tax Authorities

The tax authorities easily assume that a student lives in the Netherlands while studying. After all, in most cases, the student has registered with the municipality, has a citizen tax number (“BSN”), a bank account and health insurance while participating in the classes in the Netherlands. Moreover, the employer recruited the student locally in the Netherlands when signing the employment contract. Not from abroad. Consequently, the 30% rule would not apply according to the tax office.

Different View?

Is the assumption of the tax authorities correct? Did the student actually live in the Netherlands during his studies? Or did the student only temporary stay for the purpose of study in the Netherlands, and did he remain fiscally resident in another country during the study? This tiny difference between living and staying in the Netherlands is essential to answer whether the student was recruited locally in the Netherlands (30% rule not possible) or from abroad (30% rule possible provided all conditions are met).

Facts and Circumstances

It is all about facts and circumstances and whether the student has obtained a lasting connection of a personal nature with the Netherlands. If not, the student is deemed to have lived outside the Netherlands continuously and thus may qualify for the 30% rule when accepting a job in the Netherlands, provided that all conditions to qualify for the 30% ruling are met (such as the famous salary- and 150 kilometer test).

What circumstances play a role in the determination of where someone lives? There are many. It is about the mix of all relevant factors, such as:

How many times and how long in the aggregate has the student been outside the Netherlands after their first arrival for the study?
How long will the study take?
If the student has a partner and/or children: where did they stay during the study?
Has the student kept housing facilities available outside the Netherlands?
Did the student de-register as a resident outside the Netherlands?
What is the number of students’ temporary rental contracts in the Netherlands?
Temporary nature of residence permits (student/orientation year)?
Has the student worked during his study?
Did the student submit (a) resident/non-resident personal income tax return(s) in the Netherlands and/or a foreign country?
Where did the student visit the doctor/dentist?
Has the student joined the membership of clubs?
Has the student received magazines / other correspondence in the foreign country?
Foreign bank account(s), investments, (health) insurances, car, motorcycle?

Employer and employee shall jointly submit the application for the 30% rule in writing within 4 months after the start of the employment. The tax authorities will have to be convinced that the employee has not built up a lasting connection of a personal nature with the Netherlands during the study. Or the application will be rejected. The student will have to demonstrate sufficient facts and personal circumstances to prove the absence of a lasting connection with the Netherlands. And that a lasting connection with another country has been maintained during the study. It is wise for the student – where possible – to anticipate facts and certain circumstances of a personal nature during the study. The less personal connection the student has built up with the Netherlands, the more difficult it is for the tax authorities to reject the application for the 30% rule. If submitted 4 months after the start of the employment, the 30% ruling will not work backwards but from the month after the application was submitted.

The benefit of having the 30% rule is for a maximum period of 60 months. The study period in the Netherlands will reduce the duration. Nevertheless, say the student has been staying in the Netherlands for 18 months, the 30% rule will be granted for 42 months.

If the student has graduated in the Netherlands with a Master’s at a scientific, educational organization and as long as (s)he is aged under 30, the minimum required annual taxable salary level is € 30.001 (2022 calendar year). From the first of the month following the month of the student’s birthday, this minimum salary level has to be upgraded to €39.467 (2022 calendar year). If not, the 30% ruling will no longer be valid.

Whether or not the employee is eligible for the full tax-free percentage of 30% or a lower percentage depends on the salary and employment conditions. The closer the “gross” salary level (70% taxable salary plus 30% tax-free allowance) is to the “taxable” salary level (70% part), the lower the tax-free percentage may be.

Example: the agreed gross annual salary level per the employment contract is €50.000. The employee has an MSc certificate and is 28 years of age. If the 30% rule is granted, the tax-free allowance is €15.000, and the basis for calculating taxes and social security liability is €35.000. Because the taxable salary (€35.000) is higher than the minimum required taxable salary (€30.001), the full tax-free percentage of 30% can be paid. If the gross salary level had been €40.000, the taxable salary would be €28.000 if the full 30% tax-free allowance had been paid. This is not allowed: €28.000 is lower than €30.001, the “30%” rule tax free percentage should be reduced to (€40.000 – 30.001) / € 0.000 = 24,99%. It is a matter of monitoring and carefully calculating continuously!

At ZIRKZEE GROUP and European Growth Referent BV, your advisors are ready to give more ins & outs on the above and on all kinds of other expat issues. Feel free to contact the professionals below!

ZIRKZEE GROUP / European Growth Referent BV

Leo Oudshoorn and Kavita Sewkaransing

[email protected]/[email protected]

0031 71 5724965

[email protected] / [email protected]

0031 71 5724965