The 30% ruling for your foreign employees in the Netherlands
Are you an employer in the Netherlands? And do you hire highly skilled workers to come and work for you in the Netherlands? Then you may be able to use the expat scheme (formerly known as the 30% ruling). The expat scheme is a tax advantage. It compensates for the costs the expat has for moving to the Netherlands. This article explains how it works.
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? These employees may have so-called extraterritorial costs. These are costs related to moving to 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 expat scheme, 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.
Please note: the 30% scheme can also be applied to employees posted from the Netherlands to other countries, but only in certain circumstances. The conditions for this are also described below.
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. The employer must decide this when it files the first payroll tax return period of each year. And it must do so again for each year after, until the 5-year period is finished.
Upcoming changes to the 30% ruling
Did your employee start using the 30% facility before 1 January 2024? Then they fall under the old rules. You can choose to pay them 30% of their salary tax-free, or reimburse them, for the full 5 years.
Did your employee become eligible for the 30% facility after 1 January 2024? Then the following changes apply:
As of 1 January 2027, the maximum reimbursement will be reduced from 30% to 27%. Employers can pay eligible employees a maximum of 27% of their wages tax-free.
You may only apply the 30% ruling over a maximum amount. The so-called maximum remuneration (Balkenende-norm in Dutch) is set out in the Standard for Remuneration Act (Wet Normering Topinkomens, in Dutch). The maximum salary amount is set every year.
Since 1 January 2025, foreign employees who use the 30% ruling can no longer apply for the so-called partial foreign tax liability (partiële buitenlandse belastingplicht) in their income tax return. Before 2025, they were seen as a foreign taxpayer, even though they lived and worked in the Netherlands, for their taxable income from substantial interest (box 2) and from savings and investments (box 3). This means they did not have to pay taxes in Box 2 and Box 3 on foreign capital income.
Since 1 January 2025, they have to file their taxable income from substantial interest and savings and investments in the Netherlands.
What are the criteria for using the 30% ruling?
Different criteria apply to the use of the expat scheme for foreign workers you employ in the Netherlands and employees with a specific skill you post abroad.
Foreign employees
You, the employer, must apply to the Tax Administration to be allowed to use the 30% ruling for your foreign employees. Before you apply, make sure the criteria are met.
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 expat scheme as a foreign employee, the following criteria must be met:
- The worker must have a specific expertise that is scarce in the Dutch labour market. In some cases, the expertise must even be unique.
- Your employee must earn a certain minimum wage (toetsloon) showing their expertise. 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.
- There will be an additional increase to the minimum salary from 1 January 2027. This change applies to employees who started using the expat scheme on or after 1 January 2024.
- The worker 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 more than 16 months of the 24 months before starting their first working day in the Netherlands.
- You have applied to the Tax Administration, and have received a decision (beschikking) which states that you may use the 30% facility.
Read all the criteria in the Tax Administration's Handboek Loonheffingen, chapter 19.4.1 (wage tax manual, in Dutch).
Employees with a specific skill posted abroad
The expat scheme can apply only to wages for which you withhold Dutch payroll tax. You do not have to apply to the 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:
- you post the employee to Asia, Africa, Latin America, or certain Eastern-European countries.
- you can only pay the employee the tax-free percentage of their wages during the period in which they work abroad.
- the employee must be posted abroad for at least 45 days in a 12-month period.
- Assignments of less than 15 days do not count towards this.
- However, once the employee has met the 45-day condition, you may also include all assignments of at least 10 days when calculating the number of days to which you may apply the 30% ruling.
Read all the criteria in the Tax Administration's 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 8 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 for the 30% ruling. To check this, contact the Tax Information Line.
Stay informed
Since 2012, there have been several changes to the original 30% ruling. For example, the scheme's maximum duration was reduced from 10 to 5 years. And in the coming years, more changes are planned. Not only will the compensation be reduced from 30% to 27%, there will be changes to the maximum remuneration and minimum salary standards. Any future changes may also affect your employee during their ongoing 5-year period. Consult with a tax adviser or specialist to stay up-to-date.