If you are the person in the company stuck with the HR task, then there is a world to win with respect to the 30% ruling during the yearend checks.
What is the 30% ruling in a nutshell?
The 30% ruling is a tax incentive that basically comes down to 70% of the gross salary being the taxable salary and 30% of the gross salary being the tax free reimbursement of costs. In order for the expat to qualify for the 30% rule certain criteria need to be met and an application needs to be made. When the ruling is granted by the Dutch tax office to the employee, the maximum period of time the ruling can be used is 8 years. This expatriate ruling is the best tax benefit Holland has to offer.
How is the 30% ruling lost?
The 30% ruling is lost when you no longer have a job, if you have been unemployed for a longer period than three months. If you switch jobs and with the new job you do not meet the criteria for the 30% ruling request.
How is the 30% ruling accidentally lost?
One of the criteria during the application of the ruling is the minimum salary requirement. The salary of the employee applying for the ruling needs to exceed the amount of EUR 36.378. This is the 70% part. This implies the gross salary needs to be at least EUR 51.968, based on 2014 criteria.
Employees younger than 30 years old holding a masters degree already qualify for the 30% ruling with a EUR 27.653 salary. Which is a 100% salary of EUR 39.504.
Only employees working as a scientific employee connected to a university do not have this minimum requirement.
The tax office is actively checking at the end of the year when the wage tax returns for December are filed if the 30% ruling holder still meets the minimum salary requirement. If this is no longer the case, then the 30% ruling is stopped from that moment and lost for ever. You can no longer apply for this ruling.
Criteria to lose the 30% ruling
If your employee decided to work less days during the year, his annual salary could have dropped under the minimum requirement. When your employee who qualified under the lower salary requirement turns 30. Or any other event that made the salary no meet the minimum requirement. Sabbatical etc.
What to do for the HR manager with respect to not losing the 30% ruling?
The HR manager should check now (January 2015) if the 30% ruling holders meet the minimum salary requirements. This is easily and quickly done. If the minimum requirement is not met it is up to the creative mind of the HR manager to find a solution to this issue. The month of January is still the month during which the December salary can be filed in the wage tax return. Hence the month this issue should be solved.
Orange Tax Services
Our experience is that this part is seriously neglected and only to become a substantial issue when the Dutch tax office announced the ruling being expired. Please contact us for further assistance with questions you might have related to the 30% ruling.