The Netherlands’ 30% Tax Ruling — What Expats and Employers Need to Know

AGN EMEA Tax Committee News

Discover the latest updates to the Netherlands’ 30% tax ruling for foreign employees in 2025. This article explains the revised rates, key eligibility criteria, and the end of the partial foreign taxpayer status — essential insights for expats and employers navigating Dutch tax benefits and compliance.

Introduction – The Netherlands’ 30% tax facility for foreign employees:

The 30% wage tax facility (ruling) is a scheme that offers employers the option to pay a tax-free allowance of 30% of an employee’s gross salary to employees recruited from abroad with specific expertise that is scarce in the Dutch labor market for a maximum of five years.

The allowance is intended to cover the additional costs these employees incur for their stay outside their land of origin (the extraterritorial expenses, such as travel and accommodation expenses). Each year employers can opt to either apply the 30% ruling or reimburse employees for the actual extraterritorial expenses incurred. In some specific situations the latter option can be more favorable but, in most cases, the 30% ruling is applied.

The 30% ruling can be explained as follows: If an employee earns a gross income of EUR 100,000, 30% of this income (EUR 30,000) can be paid to the employee without tax during the five-year period of the ruling.

In recent years, the 30% ruling has become increasingly popular among expats who want to come to the Netherlands and work for a Dutch employer (this could be a Dutch affiliate of the foreign employer) for a couple of years.

To limit its popularity and for budgetary reasons, the Dutch government decided to adjust the 30% facility at the end of 2023. It was decided to gradually reduce the facility to 10% over 5 years (a scaling back 30-20-10 ruling) as of 2024. Due to large criticism from practitioners and international businesses, these changes have now largely been reversed as of 2025, again. This is a very welcome change for the Dutch tax practice.

A constant flat rate of 27% will be introduced as of January 1, 2027, and during 2025 and 2026, the 30% rate remains (also for existing 2024 rulings).

Application process for The Netherlands’ 30% tax ruling:

As mentioned above, an upfront ruling needs to be obtained from the Dutch tax authorities to apply the wage tax facility and process the exemption in the salary administration. Below we explain some of the most important requirements for applying the 30% ruling.

Eligibility Criteria for The Netherlands’ 30% tax ruling:

First, the employee should move to the Netherlands because of a labor contract concluded with a Dutch employer (which could be an affiliated company of the employer in the home country). A copy of the labor contract needs to be attached to the 30% facility request. The employee also needs to have a Dutch address and a tax identification number (in Dutch referred to as “BSN-nummer”).

Further, the employee should be highly skilled with specific knowledge and experience that is difficult to find (scarce) in the Dutch labor market. Therefore, it is important to prepare a proper resume explaining this knowledge and experience. A copy of the resume should be attached to the 30% facility request.

Third, during at least 16 out of 24 months prior to moving to the Netherlands the employee should have lived at a greater distance than 150 km from the Dutch border. Thus, certain Belgian, German, North French employees are excluded from the ruling (an exception could exist for PhD students). The Dutch tax authorities can request for energy bills or bank statements of the previous address to substantiate this requirement.

Note: If the employee stayed in the Netherlands for the last 25 years, the five-year period for the 30% ruling is shortened by the period of such stay.

In conclusion, a certain minimum salary threshold exists. For 2025, the minimum threshold is set at EUR 46,660 (and EUR 35,468 for employees younger than 30 years and having a university master’s degree). Note: The scheme is limited to a maximum salary of EUR 246,000 for 2025 (so the maximum salary exemption is EUR 73,800).

Partial foreign taxpayer status option scheme abolished as from 2025:

Prior to 2025, employees using the 30% ruling were also able to opt forpartial foreign taxpayer status during the five-year period, effectively meaning that so-called box 2 income (i.e. income from companies in which the taxpayer holds more than 5% of the shares) and box 3 income (i.e. income from privately held wealth such as portfolio investments and bank accounts) were not subject to tax.

The Dutch government also planned to abolish the partial foreign taxpayer status option scheme at the end of 2023. This plan has not changed; therefore, the partial foreign taxpayer status has ended as of January 1, 2025. Employees making use of the 30% ruling will, therefore, become subject to Dutch income tax as normal Dutch tax residents (including income from box 2 and box 3 assets). This is a disadvantage for employees with substantial private wealth.

Employees who were using the 30% ruling before 2024 can still benefit from the partial foreign taxpayer status through to 2026 under the transitional rules.

Brought to you by the AGN EMEA Tax Committee

If you have any questions in relation to this article, please get in touch with Jeroen.

Jeroen in ’t Hout
International Tax Advisor/Tax Specialist
Daamen & van Sluis

Web: https://daasluis.nl/en/
Email: jinthout@daasluis.nl