For foreign employees who come to work in the Netherlands, costs can be significant. Think of relocation, double housing costs and higher daily expenses. To compensate for this, the 30% ruling (also known as the 30% facility) exists.
This tax arrangement can provide expats and their employers with a considerable tax advantage. At Arslan Advocaten, we regularly advise expats and employers on the application and conditions of the 30% ruling.
What is the 30% ruling?
The 30% ruling is a tax advantage for employees who come to work in the Netherlands from abroad.
Employers may pay up to 30% of the gross salary tax-free. This is intended as compensation for the so-called extraterritorial costs that expats incur.
Conditions for the 30% ruling
Not every foreign employee qualifies. The main conditions are:
The employee was recruited from abroad by a Dutch employer.
The employee has specific expertise that is scarce in the Netherlands. This is assessed against a minimum gross annual salary (the income requirement).
The employee lived more than 150 kilometres from the Dutch border before starting employment.
The employer and employee have made a written agreement to apply the 30% ruling.
Duration of the ruling
Since 2019, the 30% ruling can be applied for a maximum of 5 years. Previously, this was 8 years.
Practical examples
Example 1: An IT specialist from India is recruited by a Dutch company. His salary is €60,000 gross per year. Thanks to the 30% ruling, 30% (€18,000) can be paid tax-free, significantly increasing his net income.
Example 2: An expat from Germany lived just across the border (within 150 km). Despite his expertise, he did not receive the 30% ruling because he did not meet the distance requirement.
Example 3: A Spanish professor was appointed at a Dutch university. He received a 4-year temporary contract. Thanks to the 30% ruling, the university needed to pay less gross salary to provide him with the same net income.
Additional benefits of the 30% ruling
In addition to the tax advantage, there are several extra benefits:
Expats with the 30% ruling can opt for partial non-resident tax status. This means that certain foreign income remains outside Dutch taxation.
Tax-free reimbursement of actual extraterritorial costs also remains possible.
For some employees, there is a tax exemption on international school fees for their children.
Checklist: applying for the 30% ruling
Check whether the salary meets the minimum threshold.
Assess whether the employee lived more than 150 km from the Dutch border.
Record the agreement in writing in the employment contract or an addendum.
Apply for the 30% ruling promptly with the Tax Authority (within 4 months of starting employment).
Have the application and calculation checked by a lawyer or tax adviser.
Why Arslan Advocaten?
Expert advice for both expats and employers
Guidance with the application at the Tax Authority
Review of employment contracts and tax risks
Years of experience in employment and tax law
FAQ about the 30% ruling
1. How much tax advantage does the 30% ruling provide?
Up to 30% of the salary can be paid tax-free, which can amount to thousands of euros per year in net terms.
2. Can the 30% ruling be applied retroactively?
Yes, if the application was submitted within 4 months of starting employment, the ruling applies from the first working day.
3. What happens if my salary falls below the income threshold?
Then the ruling lapses. It is therefore important to check this annually.
4. Does the ruling also apply to self-employed persons (freelancers)?
No, the ruling only applies to employees on a payroll.
5. How long does the 30% ruling last?
A maximum of 5 years, provided you continue to meet the conditions.