Wage tax, income tax and 30% ruling
If you receive your salary through Leiden University, we, as your employer, will also pay tax over your salary. On your payslip, you can see how much of your gross salary is paid to the Dutch tax office. On top of that, Leiden University has to pay employers’ tax and make social contributions. Therefore, there is an essential difference between your gross and net salary.
In some cases after wage tax has already been withheld from your salary, you still need to complete an annual tax return (digitally, due before 1 May every year). Matters that need to be taken in account are: partner’s income, mortgage on your house or other income sources. You may even be liable for tax deductions (e.g. mortgage interest).
The level of income tax is dependent on your income. The Dutch tax system makes use of various categories. There are three types of taxes for taxable income.
Box 1: Taxable income from work and home
Income from employment, pensions, social security, income from home ownership, etc. The tax you pay in box 1 is defined over four rates. These tariffs are recalculated annually. The figure below shows the 2016 situation (the most timely data can be found on the Dutch tax office website).
Box 2: Taxable income from substantial interest
Income from a substantial interest in a company is subject to income tax at a rate of 25%
Box 3: Taxable income from savings and investments
Taxation on income from savings and investments is set on 4% of the assets. Please note that you cannot file a digital return for the year in which you move to the Netherlands. For your first tax return, the tax and customs administration requires you to complete a so-called M form.
For more information, please consult the website of the Dutch tax office or the New to Holland website.
Since January 1, 2001, a statutory regulation has been incorporated in the Income Tax Act, allowing a person, subject to deductions from their salary, to receive under certain conditions a tax-free reimbursement from their employer, amounting to a maximum of 30% of their salary from their present job.
The aim of this tax facility is attracting foreign employees with specific skills for the Dutch labor market. In short it means that the first 30% of wages are tax free.
To be eligible for the 30% rule a number of conditions must be met:
1. You were recruited from abroad
2. You are on payroll of Leiden University
3. You must have a specific expertise which is not or scarcely available on the Dutch labor market. Conducting scientific research by definition complies to the requirements of expertise scarcity.
4. 150 kilometres away from the Dutch border: During two-thirds of a 24 months period prior to your first working day in the Netherlands, you must have lived more than 150 kilometres away from the Dutch border. These kilometres are measured in a straight line from the Dutch border. When in doubt, this website tool can help you check if you meet the boundary norm.
5. Apply for the tax ruling within four months after starting work for the rule to be effective from the commencement of your employment
This facility has a maximum term of 8 years. The term starts on the first working day. This term may be reduced if you already worked or stayed in The Netherlands before taking up employment. The term is still applicable when the application is filed later than 4 months after the start of your employment.
Employees who take advantage of the 30% facility can only accumulate pension on the remaining part of their salary. If the facility is approved after determining the annual salary ABP, in January of each year or the month of starting the job, the annual salary for that year will remain unaffected. Social security will be affected. The WW premium which should be deducted from the employee's salary can change, which means that a lower payment would be made in case of unemployment and/or inability to work.
How to apply
Contact your HR department to check if you are eligible to the 30% rule. If so they will apply on your behalf. The tax inspector will inform the HR Department in a decision about whether the company as employer is permitted to apply the 30% facility. You will be informed once the decision has been received.