The 30% ruling for your foreign employees in the Netherlands

What is the 30% ruling and how does it work?

Do you hire highly skilled employees who move to the Netherlands to work for you? Or do you post employees with a specific skill abroad? These employees may run into so-called extraterritorial costs. These are costs related to moving to or from the Netherlands, but also the costs of living, which can be higher than in the home country. Read what falls under extraterritorial costs.

Under the 30% ruling, you can compensate your highly skilled employees for these costs over a maximum period of 5 years. There are 2 ways to do this:

• You can pay a percentage of their salary tax-free.
• Your employee can claim the extraterritorial costs they have made as work expenses, and you can reimburse them fully.

Choose to reimburse the costs or pay a tax-free percentage

As the employer of highly skilled employees, you can choose between reimbursing the actual extraterritorial costs tax-free, or applying for the tax-free payment over a percentage of your employee’s wages. You choose every year, for 5 years, when you file your tax return in the first payroll period of the year.

If you started using the 30% facility before 1 January 2024, you could choose to pay them 30% of their salary tax-free for 5 years, or reimburse them.

The Dutch government wants to limit the 30% ruling. These are the changes in 2024 and 2025:

What are the criteria for using the 30% ruling?

Different criteria apply to the use of the 30% facility for foreign workers you employ in the Netherlands and employees with a specific skill you post abroad.

Foreign employees

You must apply to the Netherlands Tax Administration to be allowed to use the 30% ruling for your foreign employees. Before you apply, make sure you meet the criteria.

Reimbursement

If you reimburse the costs, these costs must be reasonable and plausible. You enter the costs and reimbursement for each employee in your payroll records.

Criteria

To qualify for the 30% ruling as a foreign employee, the following criteria must be met:

1. The worker is employed (in loondienst) by your company.
2. The worker must be a highly skilled migrant. This means they must have a specific expertise that is scarce or unique in the Dutch labour market.
3. They must be recruited from abroad or transferred within a multinational company to work in the Netherlands. The employee must have lived more than 150 kilometres away from the Dutch borders for at least 16 months of the 24 months before moving to the Netherlands.
4. The employee must comply with the income standard (toetsloon). Your employee must earn a certain minimum wage showing their expertise. Their wage will also depend on age and education. For a table with wages, click the question ‘when do I have a specific expertise’.

   • If your employee earns a lower wage, they can only receive a reimbursement on the difference between their salary and the income standard.
   • Employees who conduct scientific research in a designated research facility or doctors training to be a specialist do not need to meet this income criterion.
5. You have applied to the Netherlands Tax Administration (Belastingdienst), and have received a decision (beschikking) which states that you may use the 30% facility.

Employees with a specific skill posted abroad

You do not have to apply to the Netherlands Tax Administration for a decision (beschikking) to use the 30% facility for an employee you post abroad. But you must meet several criteria for using the 30% facility. For example:

• the employee must be posted abroad for at least 45 consecutive days in a 12-month period;
• you can only pay the employee the tax-free percentage of their wages during the period in which they work abroad.
• If there are several postings, the employee must first meet the 45-day criterion. And after that, only postings that last for 10 days or more count towards the 30% facility.
• you post the employee to Asia, Africa, Latin-America, or certain Eastern-European countries

Read all the criteria in the Tax Administration Handboek Loonheffingen, chapter 19.4.2 (wage tax manual, in Dutch).

Apply for a decision to the Tax Administration

To apply for the 30% ruling on behalf of a foreign employee, you need a decision (beschikking) from the Netherlands Tax Administration. You must file this request for a decision within 4 months after the first workday of your employee. You will receive the outcome within 10 weeks. You can find the application form on the website of the Tax Administration.

The application should include supporting documents such as employment contracts, and proof of qualifications. The application form indicates which documentation must be included.

The expiry date of the 30% facility is stated in the decision.

Change of employer

You cannot take over the 30% ruling from another, former employer. This means that if you hire an employee whose former employer made use of the 30% ruling, you cannot automatically use the 30% ruling too. You and the employee must submit a new request together.

If your company is taken over by another company, your employees with the 30% arrangement will keep this arrangement when transferring to the new company.

Change of position within the same company

In some cases, changing jobs within the same company does not mean there has to be a new application to the Tax Administration to see if the 30% ruling can still be applied. To make sure this is so, contact the Tax information line.

Stay informed

Since 2012, there have been several changes to the original 30% ruling: from 10 to 8 years, and from 8 to 5. There may be other changes to the 30% ruling within the 5-year period of your employee. Consult with a tax adviser or specialist to stay up-to-date.