The 30% Ruling in the Netherlands: A Guide for Employers

The 30% ruling is a Dutch tax advantage for highly skilled employees hired from abroad to work in the Netherlands. If specific conditions are met, the employer is allowed to pay 30% of the employee's gross salary as a tax-free allowance. This is intended to compensate for the extra expenses that foreign employees incur, such as travel and higher living costs.

Effectively, the employee's taxable income is reduced from 100% to 70% of their gross salary. The remaining 30% is paid out as a tax-free reimbursement. This results in a significantly higher net salary for the employee, making your job offer much more competitive.

To qualify, both the employee and the employer must meet several conditions set by the Dutch Tax and Customs Administration (Belastingdienst).

• Recruited from Abroad: The employee must have been recruited from outside the Netherlands.
• Specific Expertise: The employee must have specific expertise that is not readily available in the Dutch labor market. This is mainly determined by a minimum salary threshold.
• Minimum Salary: The employee's taxable salary must exceed a certain amount (this threshold is indexed annually). For 2024, the minimum taxable salary is around €46,107 after applying the 30% ruling. A lower threshold applies for employees under 30 with a master's degree.

As of 2024, the 30% ruling has been capped and phased. The full 30% tax-free allowance now applies for the first 20 months, then reduces to 20% for the next 20 months, and finally to 10% for the last 20 months. The maximum salary to which the ruling can be applied is also capped.