8 min

What is the 30% ruling?

An overview of the most relevant aspects of the Dutch expat ruling


Expatriates who transfer to the Netherlands generally become fully subject to Dutch personal income tax. Expatriates will often incur additional expenses due to the temporary stay outside their country of origin in relation to their employment in the Netherlands, such as double housing costs or language courses. These additional expenses are referred to as “extraterritorial costs” (or “ET costs”). Under Dutch tax law, an employer could reimburse either the actual ET costs or deemed ET costs tax free to its expatriate employees. The 30% ruling is an arrangement in the Netherlands under which the employer could reimburse 30% of the gross salary as tax free deemed ET costs (“30% allowance”), effectively resulting in an effective tax rate of max. 34.65% instead of 49.5%!

Indicative calculation based on FY22 rates:

30% ruling benefit chart

We refer to the below for a more in-dept overview of the terms and conditionsof the 30% ruling. Need assistance with obtaining the 30% ruling? Reach out to us! We are happy to assist.


Performing employment activities subject to wage tax in the Netherlands

The 30% ruling is only available for expatriates who are subject to the wage tax in the Netherlands. Expatriates who perform employment activities in the Netherlands under an employment agreement are in principle subject to Dutch wage tax and may therefore be eligible for the 30% ruling. Your employer will often be a Dutch employer, but it could also be that your employer is a foreign employer who registered in the Netherlands for Dutch wage tax purposes due to having employees working in the Netherlands.

Not only regular employees, but also expatriates who incorporate a limited liability company in the Netherlands (“BV”) may be eligible for the 30% ruling. Under Dutch tax law, substantial shareholders who provide services to their own BV are deemed to be employees under the Dutch wage tax act and may therefore be eligible to the 30% ruling (deemed employees) .


TIP! Thinking about moving to the Netherlands? Carefully plan your relocation to the Netherlands.

Recruited from abroad

To be eligible for the 30% ruling, the employee should qualify as an extraterritorial employee. This basically means that the employee should have been recruited while the employee was still living outside the Netherlands. In practice, the Dutch tax authorities ask for the date of arrival in the Netherlands and the date on which the expatriate employee’s employment agreement was signed or concluded. The Dutch tax authorities could deny the 30% ruling if the expatriate's employment agreement was signed or concluded while the expatriate already arrived in the Netherlands.


TIP! Save all correspondence with your (potential) employer. This may be useful in substantiating that you were recruited while living outside the Netherlands.


TIP! Did you arrive in the Netherlands prior to the conclusion of your employment contract in the Netherlands? Get in touch for a quick assessment.

Living >150km from the Dutch border prior to the employment in the Netherlands

The expatriate should have lived at a distance of more than 150km from the Dutch border. As a result, certain expatriates coming from (parts of) Germany, Luxembourg, Belgium or the UK are in principle excluded from the 30%ruling. As an anti-abuse rule, the expatriate should have lived at a distance of more than 150km from the Dutch border in at least 16 of the past 24 months prior to the start date of the employment in the Netherlands.


The Dutch tax authorities may ask for documents to substantiate your residency in the 24 months prior to your Dutch employment, such as bank statements, rental agreements together with proof of payments or energy bills.

TIP! Gather bank statements,rental payments or energy bills of the 24 months prior to your arrival in the Netherlands.

Specific expertise test

The expatriate should have specific expertise; scarce in the Dutch domestic labour market. In principle, the specific expertise test is met if the expatriate meets certain minimum annual salary requirements, which are indexed annually. Different salary requirements apply to different groups of expatriate employees. In the period 2017 – 2022, the following annual salary requirements are applicable:

Positive decision from the Dutch tax authorities following a joint request

The 30% ruling can only be applied upon receipt of a positive decision from the Dutch tax authorities (“ruling”) following a joint request by both the employee and the employer.


TIP! File a request for the 30% ruling within 4 months to safeguard retroactive effect! Reach out for assistance.


Agreement on the application of the 30% ruling between employee and employer

To apply the 30% ruling, the employee and the employer should agree on the application of the 30% ruling. The application of the 30% ruling can either be agreed in the employment agreement or (preferably) in an appendix to the employment agreement.


The remuneration package should be drafted in such a manner that the 30% tax free allowance will be paid in addition to the wage from current employment relating to the employment activities in the Netherlands by the employee. The wage from current employment includes not only fixed salary element like gross salary or holiday allowances, but it also includes incidental and flexible reimbursements such as bonuses.


Since the 30% ruling is calculated based on the wage from current employment income, the 30% ruling is in principle not applicable to indemnity payments in case of dismissal or retirement. It also does not apply to severance payments. We have a template appendix available and we can also review specific wording in the employment agreement if desired.

Characteristics of the 30%-ruling

Application by employer and employee

The request to apply the 30% ruling is a mutual request by the employer and the employee. If we are engaged to file the 30% ruling request, we require a power of attorney of from both the employee and the employer as we file on their behalf.


Maximum duration

The 30%ruling will currently be granted for a period of max. 60 months.


Periods of previous stay and employment in the Netherlands are deducted from the 60 months. This is not the case if since this previous period, the expatriate has not worked (twenty working days per calendar year are disregarded) or stayed (stays of in total less than six weeks for family purposes are disregarded plus an extra long stay for one year in the last ten years not exceeding three months) in the Netherlands for at least 25 years before commencing his/her current employment in the Netherlands.


The 30% ruling can be applied retrospectively from the start date of the employment agreement provided that the application is filed within 4 months after the start of the employment activities in the Netherlands. Should the application not be made within 4 months, the ruling will only be granted as of the first day of the month following on the month in which the application was filed (thus no retrospectivity then).


The 30% ruling can be applied before the formal ruling has been granted. However, if the Dutch tax authorities deny the 30% ruling application, the employer must claim back the taxes on the 30% tax-free allowances paid in the past. The employer could then still pay a tax free remuneration for actual ET costs (e.g. double housing, flight tickets for visiting family in the home country).


In case the tax authorities deny the granting of the 30% ruling, it is still possible to reimburse expenses tax-free as long as the expenses qualify as (actual incurred) extraterritorial expenses. This has to be substantiated with proof (handover of invoices and receipts).


No remuneration of actual ET costs

The employer cannot pay out an additional net allowance for actual ET costs, such as foreign service premiums, cost of living allowances, tax and social security equalization payments and reimbursements for losses on the sale of assets due to the transfer. The 30%-allowance is meant to cover these payments and will lower the amount of the 30%-allowance with an equal amount. In case expenses qualify as "extraterritorial expenses", they can be reimbursed tax-free, but at the same time they lower the amount of the 30%-allowance with an equal amount.


TIP! The following costs are not considered ET costs and can be reimbursed in addition to the 30%-allowance:
                - actual costs of an international school for children
                - moving expenses at the beginning and end of the assignment period
                - professional expenses incurred on business trips
                - a limited fixed allowance for commuting other than public transport
                - the actual expenses incurred for public transport
                - professional education expenses in connection with the employment

Advantages of the 30% ruling

Lower effective tax rate on salary

The most obvious benefit of the 30% ruling is that a maximum of 30% of the wage from current employment income can be remunerated tax-free resulting in an effective tax rate of max. 34.65% instead of 49.5%.


Partial non-resident status

An expatriate who, by using the normal residence rules (i.e. changed the center of his/her social life to the Netherlands), is considered a resident for Dutch tax purposes, may, for the duration of the 30% ruling, opt to be treated as a partial non-resident for Dutch income tax.


Under the partial non-resident status, expatriates should only subject to personal income tax on worldwide income derived from labor-, self-employed- and/or entrepreneurship activities. Interest and dividend income should not be considered taxable income except for so called income derived from companies located in the Netherlands in which the expatriate owns more than 5% of the outstanding shares, directly or indirectly. Income relating to real estate outside the Netherlands should not be subject to Dutch tax. Interest related to a mortgage loan should only be deducted if related to a house located in the Netherlands and when it is occupied as primarily dwelling. Payments related to alimony, life annuity premiums, qualified child care and extra-ordinary expenses should be deductible from the taxable base.

Opting for the partial non-resident status can be beneficial in case there are numerous (income generating) assets. The choice for the partial non-resident status eliminates the tax burden on interest, dividend and rental income. Seek advice on whether or not to opt for the partial non-resident status? Reach out!


Change your foreign driver’s license for a Dutch driver’s license

Expatriate’s who have been granted the 30% ruling should be eligible to exchange their foreign driver’s license for a Dutch driver’s license. This is mainly an advantage for expatriates from outside the EU, who in principle need to take a Dutch theory and practical test after a certain period.


Change of employer

Should your employer (or another employing group entity) change in the future, and if you have been granted a 30%-ruling in due time, it is good to bear in mind that the ruling can be continued (for the remaining period) after the change. It is important to note that the period between the one employment and the other may never exceed three months. Nevertheless, a new application for the 30%-ruling is required and the salary test (to proof scarcity) will be required again.

Proposed changes

On 20 May 2022, the Dutch government announced their plans to limited the application of the 30% ruling. Read more here.

Questions? Feel free to reach out. Happy to chat further on this topic.

📝 Disclaimer: The above serves as general information and not professional tax advice.

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