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30% Ruling

Expats, relocating to the Netherlands for work, can qualify for a discount on their Dutch income tax bill. This discount is called the 30% ruling and it allows the employer to pay a part of the employee’s salary free of tax. This part is treated as tax-free and intended as an allowance for extraterritorial expenses.

This is one of the great benefits available to expats in the Netherlands and is a great instrument for employers to attract foreign talent!

Below we highlight the basics of the 30% ruling and some of the key changes introduced in 2024.

Important note: While we strive to bring you the most up to date information, in 2024 and 2025 the 30% ruling might undergo further changes, due to continuously changing legislation.

What are the advantages for the employee of the Dutch 30% tax ruling? 

  • The employer is allowed to pay a tax-free allowance to its employee equal to a maximum of 30% of the total fixed and variable employment income.
  • The employer is allowed to compensate the employee for the moving costs and the costs for temporary storage and transferring the estate associated with the relocation to the Netherlands.
  • The employer is allowed to pay the employee a tax-free reimbursement of school fees relating to the education of the employee’s child(ren) at a qualifying international school;
  • The employee can exchange their foreign driver’s license for a Dutch driver’s license without having to go through a driver’s exam.

How does the employer benefit from the 30% tax ruling?

Attracting top talent
Leveraging the Dutch 30% ruling enables employers to enhance their compensation packages without extra costs, making their offers more appealing internationally. This strategy attracts top global talent, filling crucial and specialized roles that can be challenging to recruit locally.

Cost Efficiency
Thanks to the 30% ruling employers can optimize their salary budgets, paying out higher net wages while retaining the same level of gross salary.

Increased Job Satisfaction
As a result, it is expected that employees who benefit from the 30% ruling may have higher job satisfaction due to increased net income, leading to higher retention rates and reduced turnover costs for the employer.

The 30% ruling can serve as a versatile tool for employers, enhancing recruitment strategies and allowing better positioning on the international talent market, optimized employment budgets and increased job satisfaction.

What happened in 2024?

In December 2023 the Dutch Senate agreed with an amendment to reduce the benefits of the 30% ruling. Here’s an overview of the changes to the 30% ruling effective as of January 1, 2024.

1. Reduction of percentage: the 30/20/10% rule

While the duration of the 30% ruling will remain the same, the tax-free benefit will reduce during the duration of the 30% ruling:

1st 20 months: 30%

2nd 20 months: 20%

3rd 20 months: 10%

2. Maximum employment income

With effect from 2024, the 30% ruling has been capped at the so-called “Balkenende norm.” In 2024, the 30% ruling may be applied up to an employment income of EUR 233.000. If the employment income is higher, no tax-free allowance can be calculated on the excess.

If the taxpayer, who is subject to the transitional law, changes their employer, the transitional law will continue to apply to them provided that the employment contract with the new employer has been agreed to within 3 months after the end of the previous employment relationship. You must be mindful of a garden leave scenario.

3. Partial non-residency status

Current 30% ruling holders can opt to be treated for personal income tax purposes as non-resident taxpayers for box 2 (income from substantial shareholdings) and box 3 (income from worldwide savings and investments).

Following the December 2023 amendments, the partial non-resident status will be abolished as of January 1, 2025.

4. Increase 30% ruling salary criteria

While not unusual to see an annual increase in the 30% ruling income requirements, percentage-wise the changes implemented as of January 1, 2024 are significantly higher than previous years:

  • An employee’s taxable employment income must amount to more than EUR 46.107 on an annual basis (2023: EUR 41.954).
  • The taxable employment income of an employee who holds a master’s degree and is younger than 30 years old must amount to more than EUR 35.048 on an annual basis (2023: EUR 31.891).

Note: Make sure that your employees comply with the new indexed amounts annually.

Sign up to obtain our white paper, where we delve deeper into the 30% ruling, sharing with you:

  • A brief history and timeline of the 30% ruling;
  • A practical checklist for applications;
  • An overview of the requirements;
  • An overview of the necessary documents.

Equip your business with all the insights needed to effectively leverage this advantageous ruling and attract top international talent.