The Dutch 30% ruling explained and how to claim it (2024)

The 30% ruling – or, as the Dutch Tax Office (Belastingdienst) calls it, the 30% tax facility – is a tax break for certain expats who move to the Netherlands for work. In some cases, thanks to a loophole, it even applies to entrepreneurs.

The 30% ruling (30%-regeling) is a notorious magnet for highly skilled migrants and does not come without any controversy.

Here’s what you need to know:

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What is the Dutch 30% ruling?

The30% rulingis a Dutch tax advantage for highly skilled employees hired abroad towork in the Netherlands. If you can meet the various conditions, your employer can pay up to 30% of your salary as a tax-free allowance for up to 60 months (or five years):

• 30% of your wage is tax-exempt for the first 20 months
• 20% of your income is tax-free for the next 20 months
• 10% of your earnings is tax-exempt for the last 20 months

The tax-free benefit is considered a compensation for the expenses you incur coming to work in the Netherlands (e.g., you may experience a highercost of livingthan you are used to).

The 30% ruling is a way to entice skilled expat workers to the Netherlands. However, it has been the focus of controversy and political debate in the last decades. In 2019, the allowance period was reduced from a guaranteedmaximum of eight yearsto only five years.

Five years later,in 2024, the government cut the tax-free benefit from 30% overall to the scaled ladder that’s reported above. The change applies to new arrivals only and does not affect existing claimants.

Who is eligible for the Dutch 30% ruling?

Internationals recruited from abroad for a position in the Netherlands meet the followingconditionsto qualify for the 30% ruling:

• You were transferred or recruited from abroad to work as an employee;self-employed personscannot claim the 30% ruling
• You and your employer agree in writing (e.g., in your employment contract) that the ruling is applicable
• You must have specific expertise that is not or is hardly available in the Dutch labor market
• You did not reside within 150 km of the Dutch border for more than 16 out of 24 months before your first working day. As such, expat employees from Belgium, Luxembourg, Northern France, large parts of Germany, and a small part of the UK cannot claim the 30% ruling.
• Your gross salary meets the minimum requirements (this is adjusted annually):
  • In 2024, the annual taxable income cannot be less than €65,868 (changed from €59,935 in 2023)
  • If you have completed a master’s degree and are younger than 30 years old, you cannot earn less than €50,069 (changed from €45,559 in 2023)

In the case of recent PhD graduates, scientific researchers, and medical specialist trainees, the requirements for the 30% ruling are somewhat relaxed.

Requirements for recent PhD graduates

To be considered a recent PhD graduate, you must have obtained your degree within the past year. Then, to benefit from the 30% ruling, you must also have an agreement in writing, rare expertise, and meet the gross minimum income requirement.

However, you will also be regarded as an expat employee if you can meet the following conditions:

• You lived in the Netherlands or within a radius of 150 km from the Dutch border during your studies and the time between your graduation and starting the job
• You lived at least 150 km from the Dutch border for more than 16 months in the 24 months before coming to the Netherlands to study for your PhD

You’re also deemed an international worker if you:

• Conducted your doctoral research in the Netherlands and had a side job
• Had an employment contract before earning your degree on the condition that you graduated with your PhD

Researchers and medical specialist trainees

Scientific researchers who work for a publicly funded university or research institution in the Netherlands do not have to meet the minimum salary requirement. Likewise, there is no minimum required salary for medical specialists in training.

The 30% rule for self-employed freelancers

The Dutch 30% ruling is for expat employees only. However, if you are starting your own business in the Netherlands, you may be able to keep the 30% tax allowance.

In that case, you must set up your business as a limited company (besloten vennootschap – BV) and put yourself on the employee payroll. As such, you’ll still be eligible for the 30% ruling, provided you meet the other ruling requirements.

How to apply for the 30% ruling in the Netherlands

You and your employer must file a joint application for the 30% ruling. You can do so by printing out theapplication formor calling thetax information linefor an information pack.

You will need to provide copies of:

• Valid passport or photo ID
• ADutch employment contractor a letter that confirms your position
• If applicable, avalid work permit
• YourDutch social security number(Burgerservicenummer–BSN)
• Proof ofaddress in the Netherlands
• Proof of residence in another country before the hiring process began
• Company details, including company tax number
• Written agreement clearly stating that both parties have consented to the application for the ruling

Once you have completed and signed the form, you can send it to the following address:

Belastingdienst/Kennis— en Expertisecentrum Buitenland
PO Box 2865
6401 DJ Heerlen
The Netherlands

You will receive the decision from the Dutch Tax Office within eight weeks.

How does the Netherlands’ 30% ruling work?

After the Dutch Tax Office grants the 30% ruling, the employer stops deductingwage tax(loonbelasting) on 30/20/10% of the gross monthly salary. Instead, it’ll be paid out to the employee.

Keep in mind, however, that your salary must still meet the minimum requirements. Two practical examples of how the 30% ruling works:

• Your salary is €100,000; reducing it by 30% brings it down to €70,000, which is above the minimum required income. This means you can enjoy the full benefit of the 30% ruling.
• Your gross annual salary is €80,000; reducing it by 30% brings it down to €56,000, which is below the minimum threshold. So, you would only be eligible for a portion of the ruling, not the total amount. In 2024, that would be €65,868 – €56,000 = losing out on €9,868 in tax-free wage.

It’s worth noting that you willnotreceive an extra 30% payout of your salary. Instead, 30/20/10% of your earnings is tax-exempt. So, for example:

• Your gross salary is €100,000; 30% of that (€30,000) is tax-exempt
• The 2024 income tax rate for earnings up to €75,518 is 36.97%
• As such, you’d pay €70,000 x 36.97% = €25,879 inincome tax

However, if you don’t qualify for the 30% ruling:

• Your taxable wage is €100,000
• The 2024 income tax rate is 36.97% for earnings up to €75,518 and 49.5% for anything above that
• As such, you’d pay (€70,000 x 36.97%) + ((€100,000 – €75,518) x 49.5%) = €25,879 + €12,118.59 = €37,997.59 in income tax

The difference of €37,997.59 – €25,879 = €12,118.59 is what you’ll be getting in your bank account. Or rather, keep in your bank account because you don’t have to pay it to the Dutch Tax Office.

Tax advise for foreigners

Another point worth noting is that the employer is not legally obligated to pass on the 30% ruling tax advantage to the employee. In practice, the employer can partially or fully pocket the difference. This usually only happens when employees are unaware of the 30% ruling benefits.

You should discuss this issue with any potential employer before taking up a post.

In addition, lowering your taxable income will most likely have implications for your pension build and unemployment or disability benefits. This is one of the reasons why both employer and employee must have a binding written agreement.

Assuch, it’s recommended to hire an accountant or tax advisor. Manyspecialize in helping expats with their tax concerns and provide services in English, including:

• Expat Service
• Klår Finance
• The TaxSavers

How long can you claim the 30% ruling?

The maximum duration of the 30% ruling is up to 60 months (or five years).

You can claim the tax benefit for that time frame, provided you still meet all requirements. For example, if you become unemployed for more than three months, you will no longer be considered an employee and lose your rights to the 30% ruling.

What happens if you change jobs?

When you change employers within a business group and your new position allows you to meet the conditions, the 30% ruling decision remains valid. You do not have to submit a new application.

However, if you find a new job with a different employer, you will have to submit a new application. You will be eligible to keep the tax advantage when:

• You start your new job within three months after leaving the old one
• You submit your application within four months after you start working for your new employer

Are there other benefits of the 30% tax ruling?

In addition to paying less tax, there are many other benefits to the 30% ruling in the Netherlands.

Partial non-resident status

Currently, expats who qualify for the 30% ruling can also opt for partial non-resident taxpayer status. This allows them to avoid payingincome taxon their wealth and assets, and any foreign company shares. However, you still need to pay income tax on your gross salary.

Starting 1 January 2025, the partial non-resident taxpayer status will beabolished. A transitional rule will apply, allowing expats to use this status until the end of 2026, subject to certain conditions.

Driving license in the Netherlands

Most internationals must retake a driving test toexchange their foreign driving licensefor a Dutch one. However, expats benefitting from the 30% ruling are exempt from retaking the test. This also applies to family members registered at the same address.

Retrospective claiming

If the application is submitted within four months of you starting your employment, the 30% ruling becomes effective retrospectively. If submitted after four months, it will become effective as of the first day of the month following the month of application.

The Dutch Tax Office will reduce the total duration of the ruling by the period you have already resided in the Netherlands.

Useful resources

• Belastindienst – information on a range of Dutch income tax issues
• Government of the Netherlands – website with information on income tax in the Netherlands

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