No 30% ruling during the so-called garden leave
If the 30% ruling is granted, it provides for the following benefits:
- It allows the employer to grant a tax free allowance to the employee, as a compensation for the extra costs due to working in a foreign country. This means that the initial salary is reduced by a maximum of 30 % and paid out as an tax free allowance.
- The employee can opt for the status of “partial non-resident taxpayer” in the Netherland when filing the Dutch income tax return. As a consequence, the employee will be subject to Dutch taxation on limited source of income only.
- As partial non-resident tax payer, an US nationals or holders of a green card may exclude the remuneration relating to non-Dutch working days from their Dutch taxable base.
- A foreign driving license can be exchanged for a Dutch driving license without taking any tests or exams.
- Fees for international schools can be reimbursed or paid tax exempt by the employer.
Recently the Dutch Courts has decided that the 30% ruling does not apply to the employment income received from the employer during the so-called “garden leave” (period during an individual is officially employed but exempt from performing any duties).