The Netherlands is renowned for its attractive work environment, offering excellent opportunities for highly skilled professionals. One of the key benefits for expatriates working in the Netherlands is the 30% tax ruling. This guide provides an in-depth overview of what the 30% tax ruling is, its benefits, eligibility criteria, and how to apply for it.
The 30% tax ruling is a tax advantage offered by the Dutch government to highly skilled migrants. Under this ruling, employers are allowed to pay up to 30% of an employee's gross salary as a tax-free allowance. This is intended to compensate for the additional costs incurred by expatriates relocating to and living in the Netherlands.
Increased Take-Home Pay: The most significant benefit of the 30% tax ruling is the increase in net income. With up to 30% of your gross salary tax-free, your disposable income is significantly higher compared to regular taxation.
Reimbursement for Relocation Costs: The tax-free allowance is designed to cover relocation expenses such as housing, travel, and other costs associated with moving to the Netherlands.
Simplified Administration: Employers can process the tax-free allowance directly through payroll, reducing the need for additional claims or reimbursements.
Eligibility for Additional Tax Benefits: Expats benefiting from the 30% ruling are also eligible for other advantages, such as tax-free reimbursement for international school fees for their children.
Driving a Foreign-Plated Car: The 30% ruling allows you to drive a car with foreign license plates without having to pay Dutch registration tax (BPM).
Choice of Non-Resident Taxpayer Status: Expats with the 30% ruling can choose to be treated as non-residents for tax purposes, which may exempt them from certain taxes, such as tax on savings and investments.
To qualify for the 30% tax ruling, you must meet the following criteria:
Employment Agreement: You must be employed by a Dutch company or a foreign company registered with the Dutch tax authorities.
Highly Skilled Professional: Your skills and expertise must be considered scarce or in high demand in the Dutch labor market. Generally, this is assessed based on your salary.
Minimum Salary Requirement: As of 2025, the gross annual salary requirement (excluding the tax-free allowance) is approximately €41,000 for professionals aged 30 and above. For younger professionals under 30 with a master’s degree, the threshold is lower.
Relocation from a Significant Distance: You must have lived at least 150 kilometers away from the Dutch border for 16 out of the 24 months prior to your employment in the Netherlands.
Timely Application: The application for the 30% ruling must be submitted within four months of starting your job to benefit from the full retroactive allowance.
The application process involves the following steps:
Employer’s Role: Your employer must initiate the application process by submitting a request to the Dutch Tax and Customs Administration (Belastingdienst).
Documentation: You will need to provide documents proving your eligibility, such as your employment contract, proof of previous residence outside the 150-kilometer zone, and evidence of your educational qualifications or skills.
Approval Timeline: The Dutch Tax Authority typically processes applications within 8-12 weeks. Once approved, the allowance is applied retroactively to the start date of your employment.
Initially, the 30% ruling was valid for a maximum of 10 years. However, as of 2019, the maximum duration has been reduced to 5 years. If you switch employers within this period, you can transfer the ruling, provided you meet the criteria and maintain continuity in your employment.
The Dutch government periodically reviews and updates the conditions of the 30% ruling. It is essential to stay informed about any changes that may affect your eligibility or the benefits you receive.
The 30% tax ruling is particularly beneficial for:
The 30% tax ruling is a unique benefit that can significantly ease the financial burden of relocating to the Netherlands. By increasing your take-home pay and offering additional tax advantages, it makes working in the Netherlands an even more attractive proposition.
If you’re planning to move to the Netherlands or are already employed there, ensure that you understand the eligibility criteria and application process to make the most of this opportunity. For further assistance or questions, feel free to reach out to us.