The Dutch government has made some changes to its tax legislation for 2025. On 14 November 2024, the House of Representatives approved the changes to the 30% ruling scheme that had been announced as part of the budget plan for 2025. Final approval by the Senate was expected in December.
Under the Netherlands’ expatriate tax regime, some qualifying employees can receive a tax-free reimbursement of up to 30% of their salary for the first five years of employment. The 30% tax-free amount is considered to cover extraterritorial expenses costs, regardless of the actual costs incurred. These are defined as expenses the expatriate employees incur because they live outside of their home country The amount is calculated on the basis of the salary as determined in accordance with the provisions of the Wage Tax Act. The salary is multiplied by the factor 100/70 to obtain the basis for the calculation of the 30%-allowance.
The 30% ruling regime was initially introduced to attract skilled professionals from overseas with industry-specific knowledge.
For new applications made As of 1 January 2024, the 30% ruling had been scaled back, reducing the tax-free allowance to 20% during the second 20 months of the duration and to 10% during the last 20 months.
However, the government now announced, as part of its 2025 budget plan, that the scaling back of the “30-20-10” regime will be reversed, and a maximum tax-free reimbursement of 27% will apply as of 1 January 2027. For years 2025 and 2026, a 30% rate will apply to all incoming employees. In the event of a change of employer, the transitional law will remain applicable with the new employer, provided that a new employment contract is concluded within three months after the end of the employment with the previous employer.
The government also proposes to increase the salary requirement for the 30% scheme from EUR 46,107 to EUR 50,436 (2024) as of January 1, 2027. The salary requirement for incoming employees under the age of 30 with a master's degree will increase from EUR 35,048 to EUR 38,338 (2024).
Robin Schalekamp
BDO In Netherlands
What is the 30% Ruling?
Under the Netherlands’ expatriate tax regime, some qualifying employees can receive a tax-free reimbursement of up to 30% of their salary for the first five years of employment. The 30% tax-free amount is considered to cover extraterritorial expenses costs, regardless of the actual costs incurred. These are defined as expenses the expatriate employees incur because they live outside of their home country The amount is calculated on the basis of the salary as determined in accordance with the provisions of the Wage Tax Act. The salary is multiplied by the factor 100/70 to obtain the basis for the calculation of the 30%-allowance.The 30% ruling regime was initially introduced to attract skilled professionals from overseas with industry-specific knowledge.
Changes
For new applications made As of 1 January 2024, the 30% ruling had been scaled back, reducing the tax-free allowance to 20% during the second 20 months of the duration and to 10% during the last 20 months.However, the government now announced, as part of its 2025 budget plan, that the scaling back of the “30-20-10” regime will be reversed, and a maximum tax-free reimbursement of 27% will apply as of 1 January 2027. For years 2025 and 2026, a 30% rate will apply to all incoming employees. In the event of a change of employer, the transitional law will remain applicable with the new employer, provided that a new employment contract is concluded within three months after the end of the employment with the previous employer.
The government also proposes to increase the salary requirement for the 30% scheme from EUR 46,107 to EUR 50,436 (2024) as of January 1, 2027. The salary requirement for incoming employees under the age of 30 with a master's degree will increase from EUR 35,048 to EUR 38,338 (2024).
Robin Schalekamp
BDO In Netherlands