Taxes
Foreign employees who live and work in the Netherlands are liable for taxes over their income. The main taxes are income tax, wage tax, dividend tax, real estate tax and social security.
Many foreign employees who know beforehand that they will only work in the Netherlands for a few years take advantage of the so-called 35 % ruling (30 % ruling as of January 1, 2001). Employees who make use of this facility are treated -upon their request- as a non-resident. The effect of this tax facility is that employers can pay a tax-free allowance of up to 35 % of the wages. A condition is that the employee must have been posted to the Netherlands from another country or recruited from abroad.
The 35% ruling will only apply to employees with special skills or knowledge not readily available on the Dutch labour market, such as:
- top executives
- product specialists
- those who bring know-how into The Netherlands
- teachers at international schools
- employees of international organisations required to hire employees from member states
- employees from middle and top management employed within an organisation for at least 2.5 years who are temporarily assigned to The Netherlands within the scope of job rotation.
Main features of the 35% ruling are:
- the employer may pay 35% of the employee's remuneration tax free
- school fees for the international school may be reimbursed tax free to the employee. The actual cost of attendance at an international primary or secondary school, reimbursed by the employer, will not be considered taxable income in the hands of the employee, provided the costs are limited to tuition fees and transport.
Those wishing to work in the Netherlands need a Sofi-number (Social Fiscal). To obtain a sofi-number, you must register with the municipal population register (Gemeentehuis, afd. burgerzaken). Without a SoFi-number the employer cannot pay salary.
This information is for informative purposes only, is general in nature, and is not intended to be a substitute for competent legal and professional advice. For specific questions and services we recommend you contact a specialized tax consultant.
Please feel free to contact Belastingadviesbureau J.C.P. Rath at http://www.intax.nl/taxation/.
