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. A 30% / 20% / 10% taper was legislated for 2024 but repealed by the 2025 Tax Plan before any reduction took effect, so it does not apply. Under the rules in force, the allowance stays at up to 30% in 2025 and 2026 and falls to 27% from 1 January 2027; since 1 January 2026 it is calculated on salary of at most €262,000.
This guide covers how the ruling works under the current rules, who qualifies (including the critical distance test and the 2026 salary norm), what the ruling covers, how to apply, and the transitional rules protecting employees who started using 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).
The 2024 tapering change does not apply. A structure of 30% for the first 20 months, 20% for the next 20 months and 10% for the final 20 months was proposed for 2024, but it was dropped and never took effect. The rules actually in force are:
For someone earning €100,000 gross in 2026 (under AOW age, with the general tax credit and labour tax credit), the full 30% allowance reduces taxable income to €70,000 and cuts Box 1 tax from about €37,289 to about €20,953 — a saving of roughly €16,300 a year, the same in every year of the ruling while the 30% rate applies. From 2027 the 27% maximum lowers the tax-free portion of a €100,000 salary from €30,000 to €27,000.
Importantly, employees can choose between the tax-free allowance OR reimbursement of actual extraterritorial costs — but not both simultaneously for the same period. For most employees, the fixed allowance is simpler and more valuable.
To qualify, you must have lived more than 150km from the Dutch border for more than 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 salary must meet the minimum threshold (salary norm). For 2026, your taxable salary excluding the tax-free allowance must be at least €48,013 per year — so to receive the full 30% you need a gross salary of roughly €68,590 (€48,013 ÷ 0.70). A reduced threshold of €36,497 applies to employees under 30 who hold a qualifying master’s degree, and certain scientific researchers and doctors in training have no minimum. The thresholds are indexed annually, and a higher threshold applies from 2027 for employees who did not start using the ruling by 31 December 2023.
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 fixed allowance of up to 30% of salary (27% from 2027) to be paid tax-free — 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.
The option to be treated as a partial non-resident taxpayer was abolished from 1 January 2025. Under it, Box 3 (wealth tax on deemed investment returns) applied only to certain Dutch assets, mainly Dutch real estate, and Box 2 only to substantial interests in Dutch companies — excluding most foreign investment portfolios and foreign bank accounts. Employees who already used the 30% ruling before 2024 can keep the partial non-resident option under a transitional rule until the end of 2026; new ruling users are taxed in Box 3 on their worldwide assets in the normal way.
The 30%/20%/10% taper was legislated for 2024 but repealed by the 2025 Tax Plan before any reduction took effect, so there is no taper to be grandfathered from. The changes that were actually enacted — the reduction to 27% from 2027, the €262,000 salary cap and the abolition of partial non-resident status — come with the following transitional rules:
Employees who started using the 30% ruling by 31 December 2023 keep the 30% allowance (and the current salary norm) for the remainder of their 5-year period — they are not affected by the reduction to 27% from 2027. They could also keep the partial non-resident taxpayer option until the end of 2026. The €262,000 salary cap, however, applies to all ruling users from 1 January 2026.
Employees who started using the ruling from 1 January 2024 receive up to 30% in 2025 and 2026 and up to 27% from 1 January 2027, with the €262,000 salary cap and without the partial non-resident option. There is no 30/20/10% taper for anyone.
For a new holder earning €120,000 gross, the maximum tax-free allowance is €36,000 a year in 2026 (30%), falling to €32,400 a year from 2027 (27%) — €3,600 less tax-free income each year. At 2026 tax rates the full 30% allowance saves this employee about €20,160 of Box 1 tax a year. The cap only matters for salaries above €262,000: at that level and above, the allowance in 2026 is fixed at €78,600.
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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