30 per cent ruling and unemployment
Thursday, February 11th, 2016 by Arnold Waal
The 30% ruling is the tax benefit that makes expats come to the Netherlands. 30% of the gross taxable income is paid out tax free.
How can you qualify for the 30% ruling?
If you have been attracted by a Dutch employer from abroad, you have not lived closed that 150km to the Dutch border in the 24 months before your arrival, you have not lived in the Netherlands in the 25 years before your arrival and you earn the minimum required income, then you can succesfully apply for the 30% ruling.
The minimum required income is more or less EUR 40.000 if you are under 30 years old and you hold a master degree. If you do not have a master degree or you are already over 30 years old, then the minimum required income is more or less EUR 54.000.
How long is the 30 per cent ruling valid?
The 30% ruling is valid for a maximum period of eight years. Should you have stayed in the Netherlands during the 25 year period before your arrival, then that time is deducted from the eight year period.
Can you change employers during this eight year period?
Yes you can. The reference point for obtaining the 30% ruling remains your first arrival into the Netherlands. After that you can change employers, as long as you have the minimum required income and you have not been unemployed longer than three months between jobs.
30% ruling and unemployment
As stated above, if you have been unemployed longer than three months, you will lose the ruling for ever. Whether or not you use the unemployment benefit does not make a difference.
An Indian expat arrived in September 2010 in the Netherlands and obtained successfully the so called 30% ruling. As per December 31, 2012 he left the company. In February 2013 he applied for a new job where he was hired as per April 11, 2013. The period between December 31, 2012 and the moment he was hired exceeded the three month unemployment period. Hence the Dutch tax office denied his new 30% ruling application.
The Indian expat made a court case based on the fact that his experience is very much scarcely available in the Netherlands, hence he should have the 30% ruling issued again. The court and high court disagreed. The three months cannot be extended for any reason. In other words whether you searched for a position, took a holiday used the time for study, it will not affect the rule that you cannot be without employment for a period exceeding three months, you no longer have the 30% ruling.
The fact that the employee claimed to have a specific expertise does not change this rule, even worse, if the experience was indeed so special, the employee would have been able to get a new employment easily within the three months period. That is part of the reason why this three months period was introduced in the first place.
How to apply the 30% ruling retro actively?
If the ruling is applied for within the first four months of the employment, the ruling starts on the first day of that employment. If the ruling is applied for later, the ruling starts the first day of the month following the month the application was made.
What if this Indian employee would have won the court case? The court case was decided last January 2016. The employment under discussion started April 2013. How to apply the 30% ruling in that case? What ever you do, it cannot be compensated in the income tax return. In other words, you cannot simply take 30% from the gross taxable salary in the income tax return and claim a refund. The employer needs to update the 2013, 2014 and 2015 payroll administration. That is possible and that is also the only method accepted by the Dutch tax office.
In the event your company is a listed company at a stock exchange, I doubt this company is willing to cooperate with such a request. So then you might have won the 30% ruling case against the Dutch tax office, but then the real battle with your employer starts.
Orange Tax Services
We have extensive expertise with the 30% ruling. We will be able to apply for the ruling or explain how you can keep the ruling while you start your own business. We maintain a fixed fee for the application of the 30% ruling of EUR 500. Feel free to inquire how we can assist you or your company.