As an international professional considering working in the Netherlands, the 30% ruling is an important tax benefit that can significantly increase your net income. What many international employees don’t realize, however, is that the employer plays a crucial role in the application process. The employer is responsible for submitting the application and complying with specific legal obligations. An incorrect or late application can lead to rejection and missed tax benefits. In this article, you’ll discover exactly what responsibilities your employer has and how you can ensure the application process runs smoothly.
Legal Obligations of Employers Regarding the 30% Ruling
Employers have various legal obligations when it comes to the 30% ruling application. These obligations are established in Dutch tax legislation and must be carefully followed to guarantee a successful application.
First, the employer must draft a written agreement in which both parties confirm that they are fully aware of the consequences of applying the 30% ruling. This agreement must be attached as an appendix to the employment contract and forms an essential part of the application.
Additionally, the employer is required to provide a written statement confirming that the international employee’s skills are scarce in the Dutch labor market. This statement must demonstrate that the employer has not succeeded in finding another employee with comparable expertise in the local market.
The employer must also document how many previous applicants there were and how long the position was vacant. This information supports the claim that the international employee’s expertise is indeed scarce in the Netherlands.
What Documents Must the Employer Provide?
For a successful 30% ruling application, the employer must collect and submit a complete set of documents to the Tax Authority. It’s important that all documents are correct and complete to prevent delays.
The employer must provide the following documents:
- Company information and payroll tax number of the employer
- Employment contract or secondment letter of the international employee
- Work permit (if applicable)
- Written agreement in which both parties confirm they understand the consequences of the 30% ruling
- Written statement about the scarcity of the employee’s skills
- Documentation of the recruitment process, including number of applicants and vacancy period
A practical tip for employers is to create a checklist of all required documents and systematically collect them before the international employee starts. This prevents haste and errors in the application process.
Common Mistakes Employers Make in the Application Process
Employers regularly make preventable mistakes during the 30% ruling application process. Recognizing these mistakes can help prevent rejections and speed up the process.
A common mistake is incompletely filling out the application form. Employers sometimes forget essential information or make typing errors that can lead to delays or rejection. It’s crucial to carefully check the form before it’s submitted.
Another frequently occurring mistake is not correctly documenting the scarcity of skills. Employers must provide concrete evidence that they were unable to find comparable expertise in the Dutch labor market. Vague claims without substantiation are often rejected.
Timing is also a critical factor where employers often make mistakes. Submitting the application too late can result in missing retroactive benefits. Employers must be aware of the various deadlines and strictly adhere to them.
Timing and Deadlines: When Must the Employer Act?
The timing of the application is crucial for maximizing the benefits of the 30% ruling. Employers must be aware of the various deadlines to ensure that international employees can utilize all possible tax benefits.
Ideally, the employer should submit the application within four months after the international employee has started working. If the application is submitted within this period, the ruling applies retroactively from the first working day, which means the employee also receives tax benefits for those first four months.
If the application is submitted after four months, the ruling only becomes effective from the first day of the month following the month in which the application is successfully approved. This can lead to a significant loss of tax benefits.
It’s also possible to submit an application years later, but then there are limitations for retroactive payments. Employers who conduct a global mobility compliance audit sometimes discover that they previously missed the opportunity to apply for the 30% ruling for international employees.
Consequences of Incorrect Application by the Employer
An incorrect or late application by the employer can have serious financial consequences for both the employer and the international employee. It’s important to understand and avoid these risks.
With an incorrect application, the Tax Authority may reject the 30% ruling, which means the international employee must pay the full tax rate on their entire salary. This can lead to a significantly higher tax burden than expected.
If the employer submits an application too late, this can result in missing retroactive benefits. For an international employee with a high salary, this can mean thousands of euros in missed tax benefits.
In some cases, incorrect application of the 30% ruling can lead to repayments to the Tax Authority. If it turns out that the ruling was wrongly applied, both the employer and employee may have to pay back taxes for the period during which the ruling was incorrectly used.
Employers who regularly hire international employees can benefit from a global mobility compliance audit to ensure that all their processes are correctly established and that they utilize all possible tax benefits for their international employees.
The employer’s role in the 30% ruling application is crucial for the success of the process. By complying with legal obligations, correctly providing all required documents, avoiding common mistakes, and maintaining proper timing, employers can ensure that their international employees optimally benefit from this important tax advantage. A careful approach to the application process saves time, money, and prevents unnecessary complications for all parties involved. For professional assistance with the application process, contact our tax experts today.
