30% ruling and signing employment contract, often an issue when nearly too late. Now it was too early, or was it?
30% ruling and signing employment contact
The 30% ruling is about attracting knowledge from abroad. Despite the technical innovation we experience, the actual move from one country to another is not simple. There is housing, a spouse and possible children involved. Tax is then not on your radar.
Or you did move to the Netherlands only to find out by then we have something called the 30% ruling. And from what you hear, it is interesting. Have you done your formalities in time to qualify?
Signing too early – court case
In this event an employee was attracted from abroad and the contract started on August 16, 2020 and the agreement was signed on May 18, 2020. Not too late by all means. The tax office dismissed this early signing and as formalities went, the ruling started October 1, 2020. That is not desired, desired is to get the ruling, as normally happens, from start date being August 16, 2020.
The employee argued, denied. The employee went to court. Instantly in court the tax office admitted it should have started from August 16. I can only imagine the court asked the tax office what could have been the problem. No problem.
How to adjust the result of the above court case?
Often we see that a 30% ruling application is started at the end of one calendar year and approved, retro actively, in the next calendar year. The tax office simply has process time.
Or in the above situation, in 2023 court case it is determined that the 30% ruling was applicable in August and September 2020. How to adjust that?
The employees are regularly countered by their employer that the financial year is closed, hence no more changes can be made. And that is not correct. You can update the payroll till 5 years after it has been closed for obvious updates like the 30% ruling. The wage tax returns can only be done digitally, hence it is no effort to update.
Neither is the result in the annual report of the company affected, as the 30% ruling does not cost the employer anything. The tax not paid over 30% of the salary, works neutral.
Make the adjustment in the income tax return
Some say: “ You should update the 30% ruling difference in the income tax return.” That is not possible, and if you are creative in doing that, it will be nullified a few years later.
The 30% ruling is part of the wage tax legislation and does not exist in the income tax legislation. Hence you cannot adjust that in the income tax return. The 30% ruling affects the taxable salary, and the taxable salary is the connection with the income tax return.
A short cut by surpassing the salary administration and adjusting the salary in the income tax return is therefore not possible
Tax is exciting
Tax is exciting. A too late signed employment contract in relation to the 30% ruling application is not exciting. It is better to have the agreement signed before the move to the Netherlands happens. Relaxed for everybody.