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30% ruling and sequence of events


30% ruling and sequence of events, what is that about? That is about making the difference in a successful 30% ruling application.

30% ruling and sequence of events

We often are asked about the impact of the Dutch tax system on the personal life of a potential expat in the Netherlands. This person contacts us already from abroad. Either this person has a substantial wealth or earns a good salary in their own company. Two reasons why they should not come to the Netherlands, tax wise.

The reason for coming to the Netherlands is often the partner who is either Dutch or received a Dutch assignment. Then we are asked about the impact of the Dutch taxation. We try not to horrify them, hence we inform about the 30% ruling.

The 30% ruling

We published many articles already on this subject. In short, the 30% ruling makes that only 70% of your employment income is taxed and non of your world wide assets, during the first five years of your stay in the Netherlands.

That is if the ruling is actually granted to you. The most important criteria is you being attracted from abroad. This implies you cannot start thinking about this setup if you have been in the Netherlands already for a short period of time.

Sequence of events

The sequence of events is that you already set up the BV company while you are still living abroad. We can facilitate this service for you. Then upon arrival you sign the employment agreement with your own BV company.

If you then also meet the criteria of a minimum income of roughly EUR 60.000, you have in the past 25 years not been a Dutch tax resident,  and you were not living closer to the Dutch border than 150 km in the two years before arrival, your chance of you getting the 30% ruling is very good.

It turns out you like the Netherlands

The worst thing that can happen to you is that you actually like staying in the Netherlands, hence the five year period is exceeded by you. That implies you start paying tax over the full amount of your salary. That will be something you need to digest, but then again, everybody does the same.

The challenge is with your world wide assets. If you want to prevent your assets to become subject to the very much disliked wealth tax, you need to act on that when the BV is being set up.

Again sequence of events

The moment the BV is set up you can indicate the share capital. The minimum is EUR 0,01 which is that silly it is often forgotten to be actually paid. That implies the limited liability never started. We recommend to put a significant proportion of your worldwide assets as payment on share capital.

Your salary income is taxed in Box 1 with the progressive tax rate up to 49,5%, the dividend income from your company is taxed in Box 2 currently with a 26,9% tax rate and in Box 3 are taxed your world wide assets with a maximum tax yearly of roughly 1,6%. By making a large deposit in share capital in your BV company, that money moves from Box 3 to Box 2. No more wealth tax. On top of that, if you repay yourself the share capital, this is a tax free procedure.

Tax is exciting

We think tax is exciting. Working with the rules and regulations gets us excited as well. Currently we see opportunities to have you enjoy the Netherlands, tax wise as well. Contact us for more information.



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