Not enough income, will I lose my 30% ruling?

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The 30% ruling is a much desired ruling, but sometimes you make decisions in life you regret. Or you start to regret certain decisions after you met with us.

Will I lose my 30% ruling? Pension

The 30% ruling we address in a number of articles. Recently a (former) 30% ruling holder contacted us about a problem he had.

This employee was offered during his employment in 2017 to make an extra pension contribution. A pension contribution is tax deductible, so in high earning employments a 100% contributions basically costs you roughly 50% of the amount. The employer immediately sets of the contribution in the salary specification against the taxable salary. The result however is that your fiscal salary drops.

Two years later the employee switches jobs and applied to continue the 30% ruling with the new employer. This request was being denied by the Dutch tax office. To the surprise of the employee his 2017 fiscal salary was not meeting the minimum income requirement.

During the 30% ruling period you need to meet every year the minimum income requirement. This income requirement increases every year a little bit. The month you make a change that will result the annual salary will be below the minimum income requirement, that month is the last month the 30% ruling can be applied for.

The employee now has two problems. The 30% ruling will not be granted anymore and the tax office is going to investigate how is salary was processed in a part of 2017 and in 2018 and 2019. The employer was not aware apparently that the minimum income requirement was not met in 2017. Which implies the ruling expired at that moment. The fact that the employee did have enough income in 2018 or later does not change the fact that the 30% ruling had terminated in 2017 and will never come alive again for this employee.

will I lose my 30% ruling?
will I lose my 30% ruling?

Hence not only the employee will have a much lower net salary with his new employer than he anticipated, but also he has now a discussion with his previous employer about who will pay for the too much net salary received by the employee. We recommended the employee to contact a labor lawyer. Such a lawyer you need at your side during these moments. It will not change the fact you cannot have the 30% ruling, but it might prevent you paying back too much salary you received. Salary you already spend, as you did  not anticipate the salary specification to be incorrect.

Will I lose my 30% ruling? Part time

More common is the working part time decision. You could decide to work less because of any reason. Often extension of the family make persons decide to work a day less. A day less work, is a day less gross salary. This decision might jeopardize the existence of a 30% ruling. As the minimum income requirements it not related to the hours worked. It is a fixed amount regardless.

Will I lose my 30% ruling? Exempt from appearing to work

In a severance agreement the employee can be offered to stay away for the remaining period of time. For your information, the 30% ruling does not apply at all to severance agreements. But now you are offered a severance amount at the end of the period and till the end of the period you are offered to stay away from the office. Will you lose your 30% ruling?

Basically you already lost it, as the start of the period you are asked not to come to the office anymore, is the start of the three months during which you need to find a new employment where you can continue the 30% ruling with.

Orange Tax Services

Often when we touch the subject of the 30% ruling no longer being applicable, we are shown the 30% ruling statement. Indeed, that statement we are very much aware of. However, if during the 30% ruling period the 30% income condition is not being met, the ruling has terminated the very first moment it became clear the income was no longer enough.

The 30% ruling is the most precious tax benefit an employee can have in the Netherlands. So when you think about making changes to your employment, best is to check before you do, if that change affects aspects as the 30% ruling.