The 30% ruling, also known as the expat tax scheme and officially called 30% facility is a tax advantage offered by the government to attract highly skilled foreign professionals to work in the Netherlands.
Under this scheme, eligible employees can receive up to 30% of their gross salary tax-free for a period of up to five years.
This benefit is designed to compensate for the extra costs, known as extraterritorial expenses. These are expenses that expats typically incur when relocating, such as housing, travel, and settling-in costs.
It is a win-win: international talent receives financial relief, and Dutch employers gain access to global expertise.
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30% Facility Netherlands
The 30% facility (official term used by the Dutch government and tax authorities) is a tax advantage for highly skilled expatriate employees, allowing them to receive a tax-free allowance of 30% of their salary. This ruling aims to attract and retain international talent in the country.
To be eligible, certain criteria must be met, including having specific expertise and being recruited from abroad.
It provides tax benefits by reducing the taxable income and can be applied to various components of the employee’s salary. Payroll department should be informed once the employee has been granted with this ruling.
The 30% ruling is available to employees who are recruited from outside the Netherlands to work in the country temporarily. If the application is granted, the employee is exempted from paying tax on up to 30% of salary.
This government measure supports the employee to cover the additional costs incurred from working in the Netherlands, such as travel expenses, additional housing costs and day-to-day expenses.
Duration of the 30% Ruling
The Dutch government has shortened the duration of the 30% ruling from 8 to 5 years. Employees who arrived in the Netherlands in or after 2019 will be able to apply the tax break for up to 5 years.
Reasons to shorten the duration of this ruling are:
- About 80% of expat employees use the facility for 5 years or less.
- Many of the remaining 20% of expat employees are not in the Netherlands temporarily but stay for a longer period.
- In other countries with a comparable ruling, the tax break is often available for 5 years.
- The additional costs that the 30% facility is intended to cover decline over time. A shorter 30% ruling is less expensive but is almost as effective.
Process of Work 30% Ruling Netherlands
There are three situations that could occur in regard to the 30% ruling.
Situation 1: Newly hired employee has the 30% facility with their former employer.
As employer, together with the employee, apply to the International Dutch Tax Authority to inquire about the possibility of continuing or extending the current 30% facility ruling. This application must be submitted no later than 3 months after the employee’s departure from the former employer.
If the employee applies within 4 months after starting the new job and the Dutch Tax Authority approves the extension, the ruling can continue from the first day of employment at the new company.
Situation 2: Employee would like to apply for the 30% facility and currently does not have the ruling.
The employee will have to research and see if they are able to join the ruling and will have to fill in a Tax Application Form.
Situation 3: Employee is leaving the company but would like to remain the current 30% ruling with their new employer.
There isn’t any action required from the current employer, however the employee will have to apply together with their new employer asking the International Dutch Tax Authority for the continuation or extension of the current 30% ruling.
Note: The application form must be sent by post and cannot be submitted via email to the International Dutch Tax Authorities. It is recommended to send the postal document using registered mail [in Dutch aangetekend per post versturen].
30 Ruling Netherlands 2025 and 2026
The Dutch government has recently announced a significant change in its approach to the 30% ruling. However, in a reversal of this decision, the Dutch government has confirmed that the tax-free percentage will remain at 30% for both 2025 and 2026.
This decision comes as a relief to many expats and employers who rely on the 30% ruling to attract and retain international talent. Maintaining the current percentage ensures that the Netherlands remains competitive in the global labour market.
By keeping the percentage unchanged, the government acknowledges the value of foreign expertise in strengthening the Dutch economy. This move is expected to benefit sectors such as technology, finance, and academia, which often rely on international employees.
The decision aligns with broader efforts to maintain the Netherlands’ reputation as an attractive destination for global professionals. It also reflects the government’s responsiveness to feedback from the business communities.
While the ruling remains unchanged for now, it is important for employers to stay informed about future developments in 2027.
30 Ruling Netherlands 2027
Starting January 1, 2027, the Dutch government announced the tax-free percentage will be reduced to 27% for the entire duration of the ruling.
International employees who started using the ruling before January 1, 2024 can keep the full 30% facility for five years.
Those starting on or after January 1, 2024 will be subject to the 27% rate from January 1, 2027.
The salary thresholds under the scheme will be increased and the Tax and Customs Administration of the Netherlands has updated the 30 percent ruling conditions.
Key actions for employers and HR prior to 2027: Review the current employee cases that might be impacted in the future and inform employees accordingly.
More Information
- Website Dutch Tax Authority: 30% facility information and requirements.
- Application Form year 2025.
- FAQs on Dutch Labour Law: Essential Answers Employment Law.
- Employment Law Changes Netherlands 2025.
