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.
The Dutch 30% ruling remains one of the most attractive tax benefits for international employees working in the Netherlands. For many employers, it is also an important tool for attracting highly skilled talent from abroad in an increasingly competitive international labor market. However, the 30% ruling has undergone several major changes in recent years, and additional changes may still follow due to ongoing political discussions and legislative developments.
In this article, we explain the basics of the Dutch 30% ruling, the advantages for employers and employees, and the current status of the scheme in 2026.
What is the Dutch 30% ruling?
The 30% ruling is a Dutch tax facility designed for employees who move to the Netherlands for work and possess expertise that is scarce or unavailable on the Dutch labor market. Under this scheme, employers may pay part of the employee’s salary tax-free to compensate for the additional costs associated with relocating and working abroad. These are known as “extraterritorial costs.” The ruling can significantly increase the employee’s net salary without increasing the employer’s total salary costs.
Advantages of the 30% ruling for employees
The 30% ruling offers several financial and practical benefits for international employees living and working in the Netherlands.
Tax-free salary allowance
Employers may pay up to 30% of the employee’s employment income tax-free, depending on the applicable transitional rules and the duration of the ruling. This can lead to a substantial increase in net income for the employee.
Reimbursement of relocation expenses and international school fee
In addition to the tax-free allowance, employers may reimburse certain relocation-related expenses tax-free, including:
- Moving costs
- Temporary storage costs
- Costs related to transferring household belongings to the Netherlands
Employers may also reimburse school fees tax-free for children attending a qualifying international school in the Netherlands.
Easier Dutch driver’s license exchange
Employees who qualify for the 30% ruling can usually exchange their foreign driver’s license for a Dutch driver’s license without taking a Dutch driving exam.
How employers benefit from the 30% ruling
The 30% ruling is not only beneficial for employees. It also offers several strategic advantages for employers hiring international talent.
1. Attracting international talent
The ruling allows employers to offer more competitive compensation packages to foreign employees without significantly increasing overall employment costs. This makes it easier to attract highly skilled professionals for specialized or difficult-to-fill positions.
2. More efficient salary structures
Because part of the salary can be paid tax-free, employers can often offer employees a higher net income while maintaining the same gross salary budget.
3. Increased employee satisfaction and retention
Employees benefiting from the 30% ruling often experience improved financial stability after relocating to the Netherlands. This can contribute to higher job satisfaction, improved retention, and lower employee turnover.
The 30/20/10 structure
One of the most important changes was the introduction of a phased structure for the tax-free allowance. Instead of applying a flat 30% benefit during the entire term, the percentage gradually decreases over time:
- First 20 months: 30%
- Second 20 months: 20%
- Third 20 months: 10%
The overall duration of the ruling remained unchanged.
Maximum salary cap
Since 2024, the tax-free allowance has also been capped at the so-called “Balkenende norm.” This means the 30% ruling only applies up to a maximum taxable salary threshold. Income above this amount no longer qualifies for the tax-free benefit.
Abolition of partial non-resident status
Previously, employees using the 30% ruling could choose partial non-resident taxpayer status for Dutch income tax purposes. This mainly affected taxation in box 2 and box 3. This advantage was abolished as of January 1, 2025.
Higher salary thresholds
The salary requirements for the 30% ruling increased significantly in 2024 and continue to be indexed annually. Employers must carefully monitor whether employees continue to meet the minimum taxable salary thresholds each year.
What is the status of the 30% ruling in 2026?
In 2026, the 30/20/10 structure is still formally in place for employees falling under the current rules and transitional arrangements. However, the Dutch government has already announced plans to replace this phased structure with a fixed 27% ruling starting January 1, 2027.
Planned changes from 2027
Under the current proposal:
- The phased 30/20/10 model would disappear
- A flat 27% tax-free allowance would apply instead
- Transitional rules would continue for certain existing cases
Although these plans have been approved politically, discussions around the future of the expat tax regime remain ongoing. The Dutch government continues to debate whether the 30% ruling should be further reduced or restricted in the future.
Need support with the 30% ruling?
Applying the 30% ruling correctly requires careful attention to tax regulations, salary requirements, deadlines, and supporting documentation. At Rock Payroll and Dutchtaxadvice.nl, we help employers and international employees navigate the Dutch expat tax system with practical, up-to-date advice.
We support businesses with:
- 30% ruling applications
- Payroll optimization
- International employment structures
- Tax compliance
- Immigration and relocation support
Download our free 30% ruling white paper
Want to better understand how the Dutch 30% ruling works? Our free white paper includes:
- A brief history of the 30% ruling
- A practical application checklist
- An overview of the requirements
- Required documents and timelines
- Important compliance considerations for employers
Download the guide and ensure your business is fully prepared to attract and support international talent in the Netherlands.