8 Steps To Registering a Company With the 30% Ruling in the Netherlands
The Netherlands is an attractive country for entrepreneurs and highly skilled migrants. The country boasts a strong economy and offers the 30% rule. This tax break benefits individuals and those looking to register a company in the Netherlands.
Looking to Register a Company in the Netherlands?
Looking to register a company in the Netherlands, including working as a freelancer? You have two options: the Eenmanszaak (sole trader) and the ‘Besloten Vennootschap’ (BV) – the Dutequivalent of a Limited Liability Company. The main difference:
- The BV excludes your personal liability. The Eenmanszaak does not.
- Only the BV allows for applying the 30% ruling, not the Eenmanszaak.
- There is a difference in taxation. The Eenmanszaak is tax-wise more attractive than the BV up to profits of € 120,000 without the 30% ruling. If you can obtain the 30% ruling in your BV, the BV becomes more attractive than the Eenmanszaak from annual profits of € 70,000 and higher.
If you have decided to go for a BV + 30% ruling, getting there might be a bit daunting to the uninitiated. That’s why, with the help of the experts at Cardon & Company, we have put together an eight-step guide.
What is The 30% Ruling?
The 30% ruling is a tax advantage for skilled employees recruited from abroad by Dutch companies. It grants 30% of the employee’s salary as a tax-free allowance and some additional benefits (see the end of this article). Not everyone is eligible for the 30% ruling; you must meet certain 30% ruling requirements. These include:
- A company must recruit you from abroad.
- Your gross salary must surpass a minimum.
- You must be highly skilled.
- You must be an employee of a company.
As explained, the 30% ruling is also available if you set up a BV, for example, when working as a freelancer or startup founder. For the purposes of the 30% ruling, you will then be recruited by your own company. If you already have a 30% ruling from pre-existing employment in the Netherlands, you can transfer it to your own BV. This means you don’t lose out! If you have lost your job that provides your 30% ruling, you can continue to enjoy the benefits for the remainder of the eligibility period by re-applying for your 30% ruling in your new BV within 3 months. Hence, setting up a BV is also a great way to continue to enjoy the 30% ruling benefits.
How Do I Setup a BV With a 30% Ruling?
Setting up a BV in the Netherlands requires you to complete several steps – we have outlined them in eight. Only steps 1-4 and 8 apply to expats already working in the Netherlands. It can be confusing, so consulting specialists can help you get prepared and processed. They provide an easy, convenient service that assists you in setting up your BV with the 30% ruling. NB: During the performance of this process, it is not required to have a valid Dutch visa or work permit, but you will need one afterwards to make use of the 30% ruling. This article will assume you have arranged this.
1. Check you meet the 30% requirements
Before you even begin the process, it’s best to check your 30% ruling eligibility. The main requirements are you must enter into employment at a Dutch company (read: your new Dutch BV), be hired from abroad (or transfer an existing ruling from within NL) and meet the income requirement. Your income is what you earn as an employee in your own BV. This will relate to the revenue you will be generating using the BV (for example, by invoicing your clients), but you must also consider your operational costs. Examples include your accountant, BV setup costs, telephone, laptop, and traveling. If you’re already in the Netherlands and hold a 30% ruling, have left your previous role and are setting up your BV within three months, you can proceed with the process. For help confirming your eligibility, consider reaching out to Cardon & Company.
2. Find an (office) address for your BV
An important part of the process is choosing the name of your BV and registering an address. This can be your home address (if you are registered there) or a specific business address. Virtual addresses are not allowed. Remember – it needs to be located within the Netherlands.
3. Register your BV
If this is your first time getting a 30% ruling, you must make sure you set your BV up while still abroad. Otherwise, you risk jeopardizing the 30% ruling requirements. This requires a 100% online BV incorporation. Not many notaries are willing to perform this, so best to reach out to Cardon & Company for this. As part of the BV incorporation process, your BV will be registered at the Chamber of Commerce (KVK) and reported to the Dutch VAT authorities. Once your BV is incorporated and registered, you will receive a € 51,30 (2022) invoice from the KVK, and you are ready to go. Your next stop is getting an accountant to manage your day-to-day accounting.
4. Create a Contract and Complete the 30% Ruling
You need to enter a 30% ruling labor contract with your BV as its director at this stage. This is where the magic happens because this is where the 30% ruling applies. You must do this correctly and timely, meaning you must sign it before you emigrate to the Netherlands. If you have done this, you have secured your 30% ruling. It only needs to be applied once your BSN number is in (see step 7). The 30% labor contract will then be used to make the application to the Dutch Tax Authorities for your 30% ruling. Your 30% ruling labor contract will be extensively scrutinized by the Tax Authorities, so make sure it’s correct. If you hold an existing 30% ruling, this is the moment where you transfer your ruling to your new BV.
5. Relocate to the Netherlands
If you’re already in the Netherlands, you can skip this step. Simply start working as an employee of your BV. When migrating to the Netherlands, you must complete steps 1-4 before stepping on the plane.
6. Apply For Your BSN Number
Once you arrive in the Netherlands, you’ll need a Burgerservicenummer (BSN). This unique personal identification number will appear on all official documents, such as a driving license or ID card. It acts as your ID number for anything for the Dutch government. Without it, you won’t be able to access government services.
7. Submit Your 30% Ruling Application
Once you have received your BSN number, you’ll be able to finalize the submission of your 30% ruling application (see step 4) with the Dutch Tax Authorities. You can do this yourself by liaising directly with the Belastingdienst, but hiring a specialist is advisable to help you out here (and don’t make any costly mistakes).
8. Begin Working Under Your BV
As the 30% rule works retroactively when you begin employment, you can begin working under it immediately! Time to enjoy the benefits of that hard work.
What Else Should I Know?
The 30% ruling does not grant you a 30% tax break over your entire income, only over the income that exceeds the 30% ruling minimum (€ 39,467 in 2022). That makes calculating your net income a bit tricky, but we advise the following formula:
- Take your prospective annual company revenues.
- Subtract an amount for annual costs (including BV setup costs, accounting costs and assorted small costs). In your first year, you can use € 5,000 as a good estimate. The remaining amount you can pay out as a salary under 30%.
- If the remaining amount is above € 56,381, you can take 30% off and consider this a tax-free salary. If it is lower than € 56,381, you can pocket the difference with € 39,467 as net salary.
- The remainder of the salary after subtracting 30% can be run through an online calculator like this one (sadly only in Dutch) to calculate your net income.
- If you add the outcomes of 3. and 4., you get your net income under 30% ruling after taxes salary. You will not use dividend payments because those are taxed higher than salary under 30%.
As a ballpark figure, expect to pay about 27-28% in taxes over an annual salary of € 100,000.
Additional Perks of Your 30% Ruling
- Tax-free reimbursement of your child’s expat schooling costs by your BV
- Tax-free reimbursement of your relocation costs to the Netherlands by your BV
- Free swap of your foreign driver’s license for a Dutch one.
To set up a BV, there are certain costs you should expect. These include a one-off registration fee for the KVK’s business register (€51.95 at the time of writing). The costs for incorporating a Dutch BV (in English) vary in accordance with the number of shareholders and their nationality but expect costs to start at about € 900 exc. VAT. Afterwards, you need to make a small deposit for a nominal share value contribution. This is an amount you choose yourself and can be as little as € 1,00. After setup, your BV will require an accountant to ensure you comply with tax and accounting laws. For an English-speaking BV accountant, expect a fee of around € 180 exc. VAT per month. It’s also a good idea to read through the information about BVs provided by the Dutch government. You can find a breakdown of a Dutch BV here.
And that’s that! For expats, setting up a BV with the 30% ruling can bring huge financial benefits. You’ll also have business freedom to create and develop your own company. A BV can be a great option for those looking to work freelance. To make the process as simple as possible, consider consulting Cardon & Company. As well as offering a service for registering BVs with the 30% rule, they also provide many resources and advice on 30% ruling requirements.
Whether you are looking to move to the Netherlands under the 30% rule with a new BV or need to transfer an existing ruling from an old job within three months, Cardon & Company can guide you through each key step and complete the entire process for you.