The 30% ruling is a tax advantage in the Netherlands for foreign employees, also known as expats, who relocate to the Netherlands for work. The purpose of this scheme is to attract talented and highly skilled individuals by helping them cover the higher costs of living in the Netherlands. If an employee meets the conditions, an employer can grant up to 30% of the salary tax-free. This can provide significant financial relief for expats adapting to the cost of their new environment.
The 30% ruling applies to foreign employees who:
- Earn a gross annual salary of more than €46,660 per year (as of 2025).
- Are recruited for a specific job requiring specialized knowledge or skills that are scarce in the Dutch labor market.
To qualify for the 30% ruling, an expat must meet the following requirements:
- Distance from the Netherlands: The employee must have lived at least 150km away from the Dutch border for at least 24 months before starting work in the Netherlands.
- Specialized job position: The employee must work in a role requiring specific expertise that is difficult to find in the Dutch labor market.
- Scarce knowledge: The employee must possess certain skills or knowledge that are not readily available in the Netherlands.
The 30% ruling applies for a maximum period of five years. This means that an expat can receive 30% of their salary tax-free for up to five years. However, the Dutch Tax Authorities (Belastingdienst) can shorten this period if the expat no longer meets the conditions, such as a job change or loss of required specialized knowledge.
Expats with a higher salary may benefit from increased tax-free allowances. For instance, employees earning more than€100,000 per year may experience greater tax advantages, making this an additional incentive for highly paid professionals.
In addition to the tax-free 30% of their salary, expats can also apply for reimbursements for additional costs incurred due to relocation, such as double housing costs or moving expenses. These extra reimbursements can help ease the transition to living in the Netherlands.
Employers should be aware that the 30%ruling is not applied automatically. They must apply for the scheme through the Dutch Tax Authorities (Belastingdienst) and ensure that their company meets the required conditions. The tax authorities may conduct an audit and request proof and documents to confirm that the employee qualifies for the ruling.
It is crucial to submit the application on time because the ruling cannot be applied retroactively if it is submitted more than four months after the employee's start date.
Additionally, the company must demonstrate a genuine need for the expat's specific skills, ensuring that the labor market is supplemented efficiently.
Expats should note that the application for the 30% ruling must be submitted by their employer. While expats do not need to apply themselves, it is recommended to inform their employer about the ruling.
Another important point is that the 30%ruling does not automatically apply if an expat relocates within theNetherlands. Moving to a location less than 150 km from the Dutch border may affect eligibility for the ruling. Therefore, it is essential to discuss this with the employer in advance.
If an expat switches jobs to a position that no longer meets the 30% ruling criteria, the ruling may be revoked. It is important to stay in touch with the employer and the Dutch Tax Authorities to check whether the ruling still applies in case of job changes.
The tax advantage of the 30% ruling also affects social security contributions, such as health insurance and pension premiums. Since 30% of the salary is paid tax-free, this may influence the amount on which social security premiums are calculated. Expats should consider this when planning their personal finances.
If an employer hires an expat, they must submit the application to the Dutch Tax Authorities on time. Employers must also provide the necessary documents and a clear overview of the specialized knowledge that the employee brings to the Netherlands.
For expats: Make sure your employer is well-informed about the application process so you can maximize the tax benefits.
- Ensure that your employer submits the application on time, as the ruling cannot be applied retroactively if it is requested more than four months after your startdate.
- Be aware of the impact on your social security contributions and other financial obligations.
- Check whether you qualify for additional reimbursements, such as double housing costs or travel expenses, alongside the tax-free 30% of your salary.
If you have any unanswered questions or would like more information, please feel free to contact one of our advisors!
