Dutch Tax Blog

Dutch Tax Blog

30% ruling ends, now what?

30 ruling in The NetherlandsPosted by Mike de Gruijl Sat, August 13, 2016 15:19:29

What happens when I loose the 30% ruling?

This is a question my clients ask me frequently. Basically the answer is quit simple;

You will have to pay more taxes and will be treated like an ordinary Dutch resident when it comes to paying taxes in The Netherlands.

Of course this is a very general answer. To give a more specific answer lets explain what the 30% ruling benefits are compared to regular Dutch tax payers.

People who have the 30% ruing are usually aware of the fact that they pay less income taxes over their salary. So for example if you earn € 100.000,- a year you will only pay income taxes over € 70.000,-. This gives you a benefit of 52% over € 30.000,-.

But what not all people know is that they also have the right to apply for a so called partial foreign tax payer arrangement. If you do apply for this, all your assets are free of taxes in The Netherlands. So this can give you a benefit of 1.2% over your assets. But be aware this doesn't mean you don't have to pay taxes at all over your assets. If your assets are located in a foreign country this can mean that you will have to pay taxes in that country. Therefore it is always smart to check where you will get the best tax rates.

The other tax benefit you have while you receive the 30% ruling is not paying taxes out of income you receive income out of substantial interest as a shareholder. This is a benefit of 25% over this income

So now we know what are benefits are while having the 30% ruling.

This makes it easier to answer your question what benefits you will loose namely, every benefit!

But there are 2 things which can make a difference and that is when you have your assets located in a different country it is likely you will pay taxes in that particular country and not in The Netherlands. So again it is a smart thing to look at the tax wages of the country and compare them with the Dutch before transferring money to a different location.

The other thing which is worth to mention is that in some cases you will receive more tax deduction on your mortgage interest. Because of the 30% ruling it happens quit often that people pay a maximum of 42% taxes instead of the 52% taxes. If you loose the 30% ruling your income can fiscally increase and causes that you will pay 52% taxes on a part of your salary and therefore have a higher tax deduction on the mortgage interest payments.

If you want to learn more about your particular situation please contact us and we are happy to calculate the effects for you.

More information on tax services in The Netherlands can be found at www.tssolutions.nl

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