Global ComplianceAugust 27, 2024by pamgro-admin30% Tax Rule in the Netherlands (2025): An Expat Tax Break Guide

The 30% ruling (30%-regeling) is a Dutch tax incentive that allows employers to pay 30% of a qualifying employee’s gross salary as a tax-free allowance for up to five years. It is designed for highly skilled international workers recruited to the Netherlands from abroad.

As of 1 January 2024, the flat 30% rate is being phased out and replaced with a stepped 30/20/10% structure over 60 months.

Eligibility requires meeting a minimum salary threshold (€46,107 for most roles in 2026), living more than 150km from the Dutch border before hire, and passing the Dutch Tax Authority’s scarcity-of-skills assessment. Foreign employers including UK and Indian companies can use an Employer of Record to manage the application process on behalf of their Dutch hires.

The 30% ruling (30%-regeling) is a Dutch tax facility administered by the Belastingdienst (Dutch Tax Authority), introduced in 1964 to attract skilled workers. It lets employers pay up to 30% of a qualifying employee’s gross salary as a tax-free reimbursement for extraterritorial costs under this expat scheme, creating a valuable tax break for international hires. These extraterritorial costs can include accommodation and travel expenses. In practice, it is a significant net salary uplift that makes the Netherlands more competitive for international hiring.

The ruling is available to employees who are recruited from abroad and possess expertise that is scarce in the Dutch labour market. The Dutch Tax Authority assesses scarcity through a combination of factors: salary level, education, age, and employment history. No single factor is decisive, the combination determines whether the employee qualifies.

As the employer, you apply jointly with the employee to the Belastingdienst. Once approved, you reduce the employee’s taxable salary by 30%, the remaining 70% is subject to Dutch income tax and social contributions as normal. You do not pay the 30% on top of the salary; it is a reallocation of the existing gross salary into a tax-free allowance. In 2026, the maximum untaxed allowance for extraterritorial costs is €78,600, which sets the maximum salary amount for this benefit.

Here is what that looks like for a €100,000 gross salary:

Note: Tax figures are illustrative. Actual amounts depend on individual tax box calculations, deductions, and social contribution rates. Consult a Dutch tax advisor for individual calculations. This salary cap mainly affects high earners.

For employers, the ruling is a recruitment and retention tool particularly for UK and Indian companies hiring senior engineering, commercial, or financial roles in the Netherlands. A Dutch employee earning €80,000 who receives the 30% ruling effectively has the purchasing power of someone on €92,000+ in a non-ruling jurisdiction. That gap closes the salary negotiation in your favour without increasing your actual payroll cost.

Until 31 December 2026, 30% ruling beneficiaries could elect to be treated as ‘partial non-residents’ for Dutch tax purposes, a status also referred to as partial foreign tax liability. This meant their foreign savings, investments (Box 3), and substantial interest (Box 2) were not subject to Dutch taxation even though they lived and worked in the Netherlands. From 1 January 2025, this option was abolished for new applicants, ending partial non-residency status for new applicants in 2025. A transitional arrangement allows those who claimed it before January 2025 to continue using it until the end of 2026. Affected employees can no longer be treated as a foreign taxpayer for those income categories under the expat scheme.

The practical impact: employees who held significant foreign investment portfolios or business stakes abroad previously benefited substantially from this provision. From 2027, all 30% ruling beneficiaries will be taxed as full Dutch residents across all income boxes.

See how a PEB company simplified global hiring and acquired talent across borders efficiently with PamGro.

Five criteria must all be met for an employee to qualify. Failing any single criterion disqualifies the application, there is no partial approval.

This dutch tax benefit is a major tax advantage because eligible employees can receive extraterritorial costs as work expenses through the allowance.

The Belastingdienst does not publish a list of qualifying roles. Instead, it assesses the combination of salary, education level, and employment background, although employees who conduct scientific research at a designated research facility can qualify without the standard salary threshold because scientific research is treated as a separate eligibility route.

In practice, candidates in software engineering, data science, financial services, life sciences, and senior commercial roles tend to qualify when the salary threshold is met. Candidates in roles that are widely available in the Dutch labour market, regardless of salary, face higher rejection risk. Employers should not promise the ruling to a candidate until the application is submitted and approved. Under the expat scheme, extraterritorial costs can also include school fees for international schools, including children’s education costs reimbursed tax free.

1. Both the employer and the employee must jointly file an application with the Dutch Tax Office.

2. Application should be submitted within 4 months of the employee’s start date. You will receive the outcome within 10 weeks, after the Dutch tax authorities review the filing and supporting documents. You will find the application form on the website of the Tax Administration.

3. Required documents include the employment contract, payslips, annual salary details, and proof of residence history. The application form indicates which documents must be submitted.

4. It’s recommended that employers and employees work with a tax professional to ensure the application is complete and accurate. After approval, employees may also use the ruling to exchange their foreign driver’s license for a Dutch one.

It’s essential to note that the Dutch government has announced changes to the 30% ruling. From 2024, the tax-free allowance will gradually decrease:

1. Step-by-step Reduction

As of 1 January 2024, the 30% ruling has been decreased to the 30/20/10% rule. This rule is applied for a maximum duration of 60 months / five years but will decrease progressively.

• In the first 20 months, eligible individuals will continue to receive 30% of their gross salary tax free.
• In the following 20 months, the tax-free allowance will be reduced to 20%.
• Finally, in the subsequent 20 months, the allowance will decrease to 10%.

The changes only apply to individuals who begin using the 30% facility on or after 1 January 2024. Those already benefiting from the facility will remain unaffected, and will continue to receive 30 percent of their gross salary tax free for the full five years.

2. Applicable to a maximum of the salary

As of January 1, 2024, the 30% facility only applies to salaries up to a certain maximum, which is set by the Standards for Remuneration Act (Wet Normering Topinkomens). This is the so-called maximum remuneration (Balkenende-norm in Dutch).

This maximum salary cap is €233,000 per year. Any income above this threshold is not eligible for the 30% ruling.

3. Termination of partial foreign tax liability

From 1 January 2025, employees who use the 30% ruling can no longer apply the so-called partial foreign tax liability (partiële buitenlandse belastingplicht) in their income tax return. Currently, they are seen as a foreign taxpayer, even though they live and work in the Netherlands, for their taxable income from substantial interest (box 2) and from savings and investments (box 3). This means they do not have to pay taxes in Box 2 and Box 3 on foreign capital income.

From 1 January 2025, they will have to file their taxable income from substantial interest and savings and investments in the Netherlands.

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

This phased reduction makes it crucial for expats to understand and plan for these changes.

The 30 ruling requirements and 30 ruling criteria include:

• Employee must be recruited from abroad or transferred to a Dutch employer. If you are self-employed, it is not possible to claim the 30% ruling.
• Employee must have specific expertise that is scarce in the Dutch labor market. These skills are determined by several factors such as salary, age, employment history, education and level of employment. None of these are conclusive but the combination of all aspects determines your specific skills.
• Employee’s taxable salary must meet a minimum threshold (adjusted annually). The minimum taxable salary for 30% ruling beneficiaries in 2024 is €65,868, with a lower threshold of €50,069 for master’s degree holders under 30. These amounts ensure that salaries remain above these levels when the 30% tax ruling is applied. Note that these thresholds are updated annually on January 1.
• Employee must have lived more than 150 km from the Dutch border for 16 out of 24 months before starting work in the Netherlands. 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.
• Additionally, the employee must not have been employed in the Netherlands in the past 25 years, and the employer must have a valid employment contract with the employee.

1. Employer and employee must jointly file an application with the Dutch Tax Office
2. Application should be submitted within 4 months of the employee’s start date. You will receive the outcome within 10 weeks. You will find the application form on the website of the Tax Administration.  
3. Required documents include employment contract, payslips, and proof of residence history. The application form indicates which documents must be submitted. 
4. It’s recommended that employers and employees work with a tax professional to ensure the application is complete and accurate.

If an employee was previously receiving the 30% ruling benefit from their former employer, their new employer cannot simply take over this benefit. Instead, the new employer and employee must jointly submit a fresh application to utilize the 30% ruling.

On the other hand, if a company undergoes a takeover, employees who were already receiving the 30% ruling benefit will be able to retain this arrangement when they transition to the new company. This ensures continuity and stability for these employees.

The 30% ruling is one of the Netherlands’ most powerful tools for attracting international talent but the application process is a joint employer-employee obligation with a strict 4-month window from the employee’s start date. Miss that window and the benefit is gone for that hire.

As your Dutch Employer of Record, PamGro manages the entire 30% ruling process on your behalf:

• Application coordination: We jointly file the application with the Belastingdienst on the employee’s start date, ensuring the 4-month window is never missed.

• Salary threshold structuring: We verify the offer letter gross is correctly structured so the taxable 70% portion clears the minimum threshold.

• 150km eligibility check: We confirm the candidate’s residence history before you make the offer so you are not promising a benefit that will be refused.

• Change of employer handling: If an employee moves from another Dutch employer to you, we manage the fresh application within the 3-month transfer window.

• Ongoing payroll compliance: Once approved, the 30% reallocation is applied correctly in every payroll run, no manual adjustments or risk of miscalculation

Use the 30% ruling as a hiring advantage, not a compliance headache

PamGro operates through its own registered Dutch entity. No partner networks. No missed deadlines.

→ Talk to PamGro about Netherlands hiring

For applications approved from 1 January 2024 onward, the maximum duration and maximum period are 60 months (five years), and in the first phase employees can receive part of their salary tax free through tax-free reimbursement of up to 30%. However, the benefit is no longer a flat 30% for the full period, it steps down to 20% in months 21–40 and 10% in months 41–60 under the new 30/20/10 rule. Applications approved before 1 January 2024 remain under the original flat 30% structure for the remainder of their 5-year term.

It depends on your employment history in the Netherlands, not your residency history. If you were employed or self-employed in the Netherlands at any point in the 25 years before your current start date, rather than only living abroad in your home country, you are disqualified. If you lived in the Netherlands but were not working – as a student, for example, or as a dependent, the disqualification does not automatically apply. Each case is assessed individually by the Belastingdienst, and that work history can still matter even if you kept ties to your home country before returning.

The 30% ruling applies only to income from employment, meaning your salary from your Dutch employer counts as taxable income. It does not apply to income from freelance work, investment returns, rental income, or business profits.

Dividend income and savings (Box 2 and Box 3) were previously shielded under the partial non-resident taxpayer option, also referred to as partial foreign tax liability, but this was abolished from 1 January 2025. From 2027, all income categories will be fully subject to Dutch taxation for ruling beneficiaries. For new applicants from 2025, this income must be reported through the income tax return and tax return, as partial non-residency status ends.

If you change Dutch employers, you do not automatically retain the ruling. Your new employer and you must jointly submit a fresh application to the Belastingdienst within three months of your new start date.

The original tax benefit can transfer only if the new application is submitted on time and the employee still meets the minimum salary requirement.

If you miss this three-month window, the ruling is lost even if you were previously an approved beneficiary. The clock on your original 60-month term does not reset; it continues from your original approval date. PamGro manages this transfer process for employees onboarded through our EOR.

No. Meeting the eligibility criteria – salary threshold, 150km rule, scarcity of expertise, recruited from abroad, makes you a strong candidate, but approval remains at the discretion of the Belastingdienst, and the related tax exemption is not automatic. The scarce expertise assessment in particular involves judgement, not a binary checklist. Applications can be rejected even when the salary threshold is met, particularly for roles that the Dutch Tax Authority does not consider scarce in the local labour market.

Working with an EOR that has submitted multiple Dutch 30% ruling applications significantly reduces the risk of rejection due to form errors or missing documentation, and it also helps avoid issues where disability benefits are affected because the ruling changes taxable salary.

In 2026, the minimum taxable salary for 30% ruling eligibility is €46,107 per year for most qualifying employees. A lower threshold of €35,048 applies to employees who hold a Dutch academic master’s degree, or an equivalent foreign qualification, and are under 30 years of age at the time of application. These thresholds are reviewed and updated annually by the Belastingdienst on 1 January.

The threshold applies to the taxable 70% portion of the gross salary not the total gross. Structure your offer letter accordingly to ensure the taxable component clears the threshold.