Tax Rulings

Understand the legislation affecting the tax you need to pay in the Netherlands...

Information provided by Quintin Eadie, tax advisor at AAme Accountants and Tax Advisors

Tel.: +31(0)15 820 0069 | website | email

Avoid being taxed in two countries: The 183 Day Ruling

If a person works in one country but is resident in (or has strong ties with) another country, they may end up being liable to pay tax in both places.

Most countries have treaties in place to avoid this double taxation and the Netherlands uses the 183 Day Ruling to determine which country collects the tax. Assuming a taxpayer’s home country has a double taxation treaty with the Netherlands, the Dutch government cannot impose income tax if:

  • The taxpayer does not work more than 183 days in the Netherlands during the whole year
  • The salary is paid by an employer that is not considered a resident in the Netherlands (it cannot be a Dutch company)
  • The salary can also not be paid by a department of the employer stated in the Netherlands

30 Percent Ruling

If income tax must be paid in the Netherlands then under certain conditions an expatriate can be eligible for the 30 percent ruling.

The purpose of this ruling is to compensate expatriates for costs related to moving and working abroad such as double housing, house hunting costs, furniture storage costs and a Dutch language course. The ruling can only be granted to employees who are hired from outside the Netherlands and who have special skills that are not available, or are very rare, in the Netherlands. 

The 30 percent ruling allows an employer to grant an employee a tax-free allowance of 30 percent of their salary. Salary is defined as the taxable income from employment. Perks like a company car count as ‘salary’ except where an allowance is explicitly tax-free (for example per-kilometre travel expenses).

The taxpayer can choose to apply the 30 percent ruling or choose to be reimbursed (tax-free) for their actual expenses incurred from living abroad. Actual expenses are not capped although they must be “reasonable.” It’s possible to apply the 30 percent ruling one year then opt for actual expenses the following year, whichever is more beneficial to the taxpayer (although actual expenses can only be claimed if the taxpayer still qualifies for the 30 percent ruling).

Inheritance and Gift Tax

Gift tax and inheritance tax are regulated by the same tax law in the Netherlands and therefore have a lot of similarities.

Inheritance

There are three different tax rates on inheritance law depending on the relationship between the beneficiary and the testator. The three categories are:

  • spouse or registered partner and children. Couples who are not married and do not have a registered partnership also qualify as long as they have been living together for at least five years
  • siblings, parents
  • other recipients

2017
Taxable amount Category 1:
Partner and children
Category 1a:
Siblings, parents
Category 2:
other recipients
€0 - €122,269 10% 18% 30%
More than €122,269 20% 36% 40%


2016

Taxable amountCategory 1:
Partner and children
Category 1a:
Siblings, parents
Category 2:
other recipients
€0 - €121,90310%18%30%
More than €121,90320%36%40%


Gifts to children

Tax-free gifts of money can be given to children, with certain caps:

  • The tax-free amount is capped at €5,320 (2016: €5,304) per child per year
  • For children aged between 18 and 40 years old a tax-free one-time gift may be given, capped at €25,526 (2016: € 25,449)
  • It’s not possible to gift both the €5,320 and €25,526 amounts in the same year, tax-free
  • Although the one-time gift is tax-free, a declaration duty applies

Tax-free caps on gifts of money to children

Year of gift


Child any age
(Gift amount may be given each year)

Child aged 18 - 40  

(one-time gift)*

Child 18+
(one-time gift if used
to buy child's
primary residence**

2017 €5,320 €25,526 €100,000
2016€5,304€25,449€ 53,016


* The amount of the one-time gift to children aged 18 - 40 can be increased to a maximum of €53,176 (2016: €53,016) on the condition that this amount will be used for the payment of the costs of expensive study or training for a profession.

**From 1 January 2017, if the gift will be used for the purchase of a primary residence for the beneficiary or for mortgage payments on the beneficiary’s primary residence then the one time tax free exemption can be applied to an amount up to €100,000. This is an increase from 2016 when the maximum tax-free gift for a primary residence was €53,016.

Gifts to other recipients

Gifts can be made tax-free to other recipients up to an amount of €2,129 (2016: €2,122) per year.

Further Information

Information provided by Quintin Eadie, tax advisor at AAme Accountants and Tax Advisors

Tel.: +31(0)15 820 0069 | website | email