It is a special tax regime for expats that come to the Netherlands to work. It is a reduced tax rate for a period of time, for these newly arrived expats.
Simply put the 30% ruling allows an employer to grant an employee a tax-free allowance of up to 30% of his total remuneration to cover expenses related to his placement abroad that he would not have had had he not been sent abroad, for instance, housing-related expenses.
Your total gross remuneration is reduced by 30% and in return, you receive a 30% tax-free allowance. The result of the 30% -ruling is a higher net salary.
When applying for the Dutch 30% ruling, the employee may choose to have a resident or partial non-resident tax status.
Expats who are partial non-residents owe taxes on income derived from certain sources specifically stated in the Dutch income tax legislation.
Partial Non-Residents are also entitled to tax deductions insofar as they relate to specific income sources, alimony payments, and mortgage interest payments for the principal places of residence.
A final important observation regarding partial non-residents is that, contrary to resident taxpayers, their net wealth is not taxed here. Hence, the ideal mortgage for a partial non-resident takes advantage of the fact that the interest payments on the mortgage are tax-deductible and that the investment income is not taxed.
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