The Netherlands 30% ruling (30%-regeling) is one of Europe’s most significant expat tax incentives, originally allowing qualifying international employees to treat 30% of their gross salary as a tax-free reimbursement for extraterritorial costs — relocation, housing, flights home, and international school fees. But from 2024, the regime changed significantly: the flat 30% benefit was replaced with a tapering structure of 30% / 20% / 10% over the 60-month maximum period.
This guide covers everything you need to know about how the ruling works after the 2024 reform, who qualifies (including the critical distance test), what the ruling covers, how to apply, and the transitional rules protecting holders who had the ruling before 2024.
The 30% ruling was originally designed to compensate expat employees for the ‘extraterritorial costs’ of working abroad — a flat 30% of gross salary treated as a tax-free expense reimbursement. This meant taxable income was reduced to 70% of gross, significantly lowering the effective Dutch income tax rate (which reaches 49.5% at the top bracket).
From 1 January 2024, the Dutch government replaced the flat 30% with a tapering structure:
The maximum period remains 60 months (5 years). For someone earning €100,000 gross, the annual tax saving under the new structure is approximately €14,800 in the first 20 months (same as before), falling to €9,900 in months 21–40, and €4,950 in the final phase — compared to €14,800 per year flat under the old regime.
Importantly, employees can choose between the flat 30/20/10% allowance OR reimbursement of actual extraterritorial costs — but not both simultaneously for the same period. For most employees, the flat allowance is simpler and more valuable.
To qualify, you must have lived more than 150km from the Dutch border for at least 16 of the 24 months immediately before your first working day in the Netherlands. This distance is measured in a straight line from your home address to the nearest point of the Dutch border. The Belastingdienst applies this rule strictly — individuals living in Belgium, Germany, or other neighbouring countries close to the border often fail this test.
Your gross salary must meet the minimum threshold. For 2026, the taxable salary (after applying the ruling) must be at least €46,107 gross per year. A reduced threshold of €35,048 gross applies to employees under 30 who hold a master’s degree from an accredited university — recognising that young specialists in research or science often command lower starting salaries. These thresholds are indexed annually.
Your employer — not you — applies for the 30% ruling by submitting a request to the Belastingdienst. Both you and your employer must sign the application. Typically, the decision takes 3–6 months, but approval can be retroactive to your start date if the application is made within 4 months of your first Dutch working day. If the application is submitted after the 4-month window, the ruling only applies from the application date — so early application is financially important.
The 30% ruling is specifically a reimbursement mechanism for extraterritorial costs — the costs associated with living and working in a foreign country. These include:
Rather than requiring employees to document these actual costs, the ruling allows a flat 30/20/10% to be paid as a tax-free allowance — simpler and often more generous than actual cost reimbursement.
Employees can elect at the start of each calendar year whether to use the flat allowance or to claim actual extraterritorial costs. The choice is per tax year. In practice, almost all ruling holders use the flat allowance because documentation of actual costs is burdensome and the flat allowance is typically larger.
Employees holding the 30% ruling can elect to be treated as a partial non-resident for Dutch tax purposes. This means Box 3 (wealth tax on deemed investment returns) applies only to Dutch assets — excluding most foreign investment portfolios, foreign bank accounts, and foreign real estate. This can be a significant additional benefit for high-net-worth expats with substantial foreign assets.
The 2024 tapering change included transitional provisions to protect existing ruling holders:
Individuals who held the 30% ruling and whose ruling was in effect on 31 December 2023 are fully grandfathered on the original flat 30% rate for the remainder of their 5-year period. They continue to receive 30% tax-free until their ruling expires, regardless of the new tapering structure. This protection was introduced after parliament overturned an earlier proposal that would have phased in the tapering more quickly for existing holders.
All new applications approved from 1 January 2024 onwards are subject to the tapering structure. There is no option to elect the old flat 30% regime for new applicants.
For a new holder earning €120,000 gross, the total tax-free allowance over the full 60-month period under the new tapering structure is approximately €230,000 less than under the old flat 30% regime. This represents a significant reduction in the ruling’s value over its lifetime, particularly for higher earners in the later stages of the 5-year period.
The Dutch government has proposed further reviews of the 30% ruling, citing fairness concerns and fiscal costs. Applicants should be aware that the regime may change again before their 5-year period concludes. The Belastingdienst publishes updates at belastingdienst.nl.
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