The Dutch 30 percent ruling explained

The Dutch 30 percent ruling explained

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Are you eligible for the Dutch 30 percent tax exemption? Finsens' tax experts explain the rules of the Dutch 30 percent ruling for expats in the Netherlands.

Maybe you've heard of the 30 percent ruling and want to benefit, but what is it and how does it work?

The 30 percent ruling

Since 2012, the conditions for eligibility have changed. We take you through the new rules step by step.

What is the 30 percent ruling?

The 30 percent reimbursement ruling is a tax advantage for foreign employees working in the Netherlands. If a number of conditions are met, the employer is allowed to grant a tax free allowance amounting to 30 percent times 100/70 of the gross salary subject to Dutch payroll tax. This results in a maximum (effective) tax rate of approximately 36.4 percent. The tax free allowance is considered a compensation for the expenses that a foreign employee has by working outside his or her home country.


To be eligible for the 30 percent ruling the following conditions have to be met:

  • The employee works for an employer liable to withhold Dutch payroll tax on the employee's salary.
  • Employer and employee have to agree in writing that the 30 percent ruling is applicable.
  • The employee has to be transferred from abroad to a Dutch employer or has to be recruited from abroad by a Dutch employer;
  • The employee did not reside within 150 kilometres from the Dutch border for the last 18 out of 24 months at the time of hiring;
  • The employee's taxable (!) salary (roughly the gross salary reduced with the tax free reimbursement under the 30 percent ruling) is at least EUR 35,000 per annum.
  • The employee needs to have expertise which is scarcely available in the Netherlands.

Flexibility of the salary requirement

To be eligible, the employee needs specific skills that are scarce on the Dutch labour market. The ‘specific skills' requirement of the old ruling has been replaced. Under the new legislation specific skills are measured by a threshold which is placed at EUR 35,000 taxable. This opens up the possibility to claim the ruling for people with a gross salary of, for example, EUR 40,000 and pay out only EUR 5,000 as a tax free reimbursement. In this situation the employee will still meet the EUR 35,000 taxable salary requirement.

PHD and masters graduates

Less strict rules apply for PHD and masters graduates younger than 30 years:

  • The minimum salary requirement is EUR 26,605 taxable.
  • If the PhD was completed in The Netherlands, the requirement of "being recruited from abroad" does not have to be met if the candidate is hired within a year of completing his or her studies.

Scientific researchers and medical specialists in training

There is no minimum required salary for scientific researchers who are employed by a university or a research institution that is subsidised by the government. Medical specialists in training also have no minimum required salary.


The requirement regarding scarcity on the labour market will be deemed to be met if the minimum salary requirement is met. The Ministry of Finance indicated however that for sectors where every candidate meets the minimum salary requirement, the scarcity test will still be applied.


The maximum duration of the 30 percent ruling is eight years. Any period spent in the Netherlands over the last 25 years will be used to reduce the maximum duration of the 30 percent ruling.

Financial consequences

Having read the above conditions, you may see that you are eligible for the ruling, but what does it actually mean?

The salary you agreed on will be reduced by a maximum of 30 percent. In return you will receive this percentage as a reimbursement for expenses. This is the most common way as it will not influence the salary burden for the employer. However, the employer is not obliged to pass on the advantage of the ruling to the employee. In practice it is possible for the employer to partially or fully take the benefit.


Lowering the taxable income will most likely have implications for your potential unemployment or disability benefits, since these benefits are based on your taxable salary. The tax authorities require that both employer and employee are aware of these consequences. Therefore the application for the 30 percent ruling has to be done by both employer and employee and an agreement in writing is necessary. This can be done by means of a clause in your employment contract or as an addendum to the employment contract.

What is considered to be ‘salary'?

This has been a major discussion point over the last few years. Of course, your gross salary is considered to be salary, but what about your bonus, holiday allowance, company car, redundancy settlement or any other benefits in kind?

Basically, your ‘regular employment income' is the basis for calculating the 30 percent tax-free reimbursement. There are regulations regarding pension premiums, but your bonus, holiday allowance, benefits in kind and company car all fall under the ruling. Severance payments specifically do not fall under the scope, read 30 pc ruling update: Supreme court decides on severance payments and see below

Other benefits

As well as having 30 percent of your salary paid tax free, there are other benefits.

Partial non-resident
Under the 30 percent ruling you can opt for ‘partial non-residency status'. Even while residing in the Netherlands, you will be considered to be a non-resident tax payer in Box 2 and Box 3 upon choosing the partial non-resident status. For Box 1 income you are still considered a resident tax payer. Consequently, you do not pay income tax on assets in Box 2 and 3 (except for real estate located in the Netherlands and substantial shareholding in a Dutch resident B.V.) but you are entitled to the partnership ruling in Box 1.

Driving Licence
If you have a foreign driving license, in most cases you will still have to redo your test in order to obtain a Dutch license. However, if you benefit from the 30 percent ruling, it is possible to switch your foreign driving license without retaking the test.

Points of attention

Under the new legislation, only payments that are done before the end of the employment relationship (thus the end of the ruling) fall under the 30 percent ruling. Severance payments are however explicitly excluded.  If you are made redundant, it is therefore important to:

  1. have an outstanding bonus payment, holiday allowance, salary payment etc., transferred to your account as soon as possible, and;
  2. have a breakdown of the redundancy package so it can be determined which part can be considered to be payment of your bonus and outstanding holiday allowance and which part is the actual severance payment.

Employment or self employed
To be eligible for the 30 percent ruling you have to be in an employment situation. If you are self-employed it will not be possible to claim the 30 percent ruling. However, if you set up a UK Limited Company or Dutch B.V. and become an employee of that company, you are considered to be in an employment situation and consequently eligible for the 30 percent ruling.

Retrospective period
The 30 percent ruling will become effective in retrospect if the application is submitted within four months after the first day of employment. If the application is submitted after four months, it will become effective as of the first day of the month following the month of application.

Changing jobs
If you change job you can reapply for the ruling, provided that you still meet the conditions and your new employment contract is signed within three months after termination of the previous. If you are benefitting from a 30 percent ruling that was issued before 1 January 2012, several special transfer rules apply when you find new employment. Especially people who do not qualify under the new legislation can meet certain grey areas in the law. If this is the case, we advise you to contact your tax advisor.

Questions regarding the 30 percent ruling?

Ask our tax lawyer Robert Bosma of Finsens Financial advisors under the tax category of Expatica's Ask the Expert free service.


Finsens Financial advisers, / Expatica

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