Understanding the 30% Ruling: New Rules & What Expats Need to Know

Towers of coins marked with tax saving and money, illustrating themes of tax breaks.

The 30% ruling has been a major tax advantage for skilled migrants, but new changes are set to impact expats in the coming years. If you’re working in the Netherlands or planning to move here, understanding these updates is crucial. Here’s everything you need to know.

What Is the 30% Ruling?

The 30% ruling is a tax exemption for highly skilled expats that allows up to 30% of their salary to be paid tax-free. This helps compensate for extra costs related to relocation, such as housing, travel, and integration expenses.

Key Changes to the 30% Ruling

The Dutch government is making adjustments to this tax benefit, affecting both new and existing expats. Here’s what’s changing:

1. Reduction of Tax-Free Allowance

Current rule (until December 31, 2026): Expats can receive 30% of their gross salary tax-free.
New rule (from January 1, 2027): The tax-free portion will drop to 27%.

2. Increase in Minimum Salary Requirements

Current minimum salary: €46,660 per year (subject to inflation adjustments).
New minimum salary (from January 1, 2027): €50,436 per year.
For employees under 30 with a master’s degree, the minimum salary will rise to €38,388.

3. End of Partial Non-Resident Tax Status

Currently, expats under the 30% ruling can opt for non-resident tax status, exempting them from Dutch tax on foreign assets.
From January 1, 2025, this option will no longer be available.

Who Will Be Affected?

The changes will impact different groups of expats in different ways:

Expats who secured the 30% ruling before January 1, 2024: No changes to their benefits.
Expats who apply for the 30% ruling between January 1, 2024, and December 31, 2026: The tax-free portion will decrease to 27% in 2027.
Expats applying after January 1, 2027: The new 27% rate and higher salary thresholds will fully apply.

Impact on Expats and Employers

For Expats

Lower tax-free allowance means higher taxable income.
Stricter salary thresholds could make qualification harder.
Loss of partial non-resident status means higher taxation on global assets.

For Employers

Recruiting international talent may become more expensive.
Companies may need to adjust salary packages to remain competitive.

What Can Expats Do?

To prepare for these changes:

Check if you qualify for the ruling before the new thresholds apply.
Consult a tax professional to understand your personal situation.
Plan ahead for potential financial impacts.

Final Thoughts

The 30% ruling has been a crucial benefit for expats, but these changes will reduce its advantages. If you’re planning to move to the Netherlands or are already benefiting from the ruling, staying informed is essential.

For more guidance, visit Expat Cousin Chat and get expert insights on living and working in the Netherlands.

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