What is the 30% tax allowance?
Expenses and Allowances
Employees who come to work in the Netherlands from another country are known as extraterritorial employees. If these employees meet certain conditions, they are eligible for a special expense allowance scheme known as the 30% ruling.
The conditions to achieve this are that you must have been recruited to the Netherlands from overseas, must have the relevant level of earnings and a University degree or sufficient experience within your field.
The 30% allowance is valid for a period of 10 years working time in the Netherlands. Therefore if you come to the Netherlands for 2 years and leave for 2 years, on your return you will still have 8 years to run on the allowance.
How it operates: If your salary is 100 units then you would reduce that by 30% to 70, pay tax on the 70 and then at the point of paying the net salary add back in (tax free) the original 30%.
This is an excellent allowance and helps reduce your overall tax bill while working in the Netherlands. Please see our country guide to tax legislation in the Netherlands for more information.