Conditions
The Dutch tax authorities review every application for the 30%-ruling on an individual basis. In this respect the Dutch tax inspector will review the employee's situation at the time he/she moves to the Netherlands to determine eligibility for the 30%-ruling. The employee will needsto meet the following 3 criteria in order to be eligible for the 30% ruling.
1. Employment/ hired from abroad
2. Specific expertise
3. Scarcity
1. Employment/ Hired from Abroad
The ruling is meant to attract foreign employees with specific expertise to the Netherlands. In that respect, the expatriate must be living outside the Netherlands when hired or assigned to work in the Netherlands. In other words, the expatriate must be employed at the time that he/she moves to the Netherlands.
If the expatriate moves to the Netherlands and is hired after already having moved to the Netherlands, then the expatriate is considered to be hired locally and may fail the employment test. The expatriate will then need to strongly argue that he/she moved to the Netherlands for employment reasons only. Having a definite employment offer before moving to the Netherlands can be used as an argument to this extent. However moving in with a Dutch partner can be an argument against you.
In addition, if the expatriate moves to the Netherlands to work as an independent contractor or entrepeneur, then the expatriate does not qualify as an employee. In these cases, the expatriate will need to consider setting up a legal entity such as a UK limited company or a Dutch BV before moving to the Netherlands, in order to be eligible for/ make use of the 30%-ruling. However, this does require careful planning prior to the actual move to the Netherlands.
Starting 2012 an employee is not considered to be hired from abroad if he/she was living in the foreign border region (within a radius of 150 kilometre from the Dutch borders) for more than 16 months in the 2 years prior to the employment start in the Netherlands.
2. Specific Expertise/ Salary Level
The ruling is meant to attract employees with specific expertise to the Netherlands. The Dutch tax authorities determine whether the employee possesses specific expertise based on a minimum salary level.
Employees with a minimum income of Eur 35.000 (excluding the maximum 30% cost allowance) are automatically deemed to have specific expertise. This salary level refers to the employee's wage that is subject to tax excluding any tax-exempt reimbursements, which means that the salary should be at least fross Eur 50.000 including the maximum 30% cost allowance.
For employees with a master's degree below the age of 30 there is a reduced minimum salary level of Eur 26.605 (excluding the 30% cost allowance). This means that their salary should be at least gross Eur 38.008 including the maximum 30% cost allowance.
Foreign employees working in the highter education/research sector or training to become a medical specialist at appointed institutions in the Netherlands can even be eligible for the 30%-ruling without a minimum salary condition.
3. Scarcity test
Finally, the employer must prove that they were forced to hire the employee from outside the Netherlands because it was difficult to find an employee with similar qualifications on the Dutch labour market. In this respect there are 3 conditions which the tax authorities can review in order to determine if specific expertise is scarce on the Dutch labour market, namely:
a. the level of education;
b. the work experience relevant for the position;
c. the salary level compared to the home country.
These conditions are reviewed interdependently by the Dutch tax authorities for the evaluation of scarcity on the Dutch labour market.
a. Education
Generally, the Dutch tax authorities will consider a business or university degree as a passing requirement. In the absence of such a degree, specific courses or other means can be used to argue eductation profiency levels.
b. Experience
As a rule of thumb, the Dutch tax authorities expect the employee to have at least 2.5 years of relevant work experience before he/she can argue to have specific expertise. In this respect, relevant relates to having experience in the same field of work and on a similar level. For the determination of the 2.5 years the tax authorities will only take work experience into consideration which is relevant for the position in the Netherlands.
c. Salary level compared to home country
The salary level will also be evaluated in relation to salary levels in the home country i.e. someone coming from India and earning Eur 35,000 per annum is considered as a higher level employee in India.
