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30% ruling and being an US national or US greencard holder

In the Netherlands we have the favorable 30% ruling to attract foreign employees to the Netherlands. This favorable ruling can become even more favorable if the concerning employee is a US national or a greencard holders. What is the case?

Deemed non resident tax payer

If you are a 30% ruling holder you can chose every year you file the Dutch income tax return whether or not you would like to be regarded a deemed non resident tax payer. A deemed non resident tax payer is a Dutch tax resident whom we indicate as being a non resident for personal income tax purposes. A bit strange, but the result is that this employee is not liable for the Box 3 wealth tax with the exception of real estate situated in the Netherlands not being the main residence and shares in a Dutch resident company exceeding 5%.

In other words, a regular 30% ruling employee is exempted from wealth tax. However, if you chose to be regarded a deemed non resident, that also implies you cannot deduct study costs, illness costs and other similar deductions. In order to activate those deductions, you need to chose in a year not to be regarded a deemed non resident, that also implies you need to report your world wide assets in the concerning year. The mortgage deduction for the house being your main residence is not affected by the choice of being a deemed non resident.

US tax payer

The only country in the world that makes a person a resident tax payer based on the nationality is the USA. Hence if a Dutch resident tax payer choses to become a deemed non resident, the USA claims this tax payer to be a resident tax payer, which makes the deemed non resident tax payer in the Netherlands to have become an actual non resident tax payer living in the Netherlands.

Complex? Not really. You only need to focus on the result. The result in case of a holder of a 30% ruling and being an US national choosing to be regarded a deemed non resident tax payer is that the days this person worked for the Dutch employer outside the Netherlands is reducing the Dutch tax burden. There are some administrative requirements, but the discount can be substantial. This Dutch tax discount is then taxed in the USA. In the end this deduction results in more net money in your hand, then without this deduction.

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