Update: Changes to the 30% Expat Ruling in the Netherlands

As an expat in the Netherlands, you may be eligible to benefit from the 30% ruling, which allows you to receive part of your salary tax-free under certain conditions. However, several important changes to this scheme will take place in the coming years. In this article, we explain what is changing and what it means for you.

The 30% ruling is designed to help international employees with the additional costs of living and working in the Netherlands, such as housing and living expenses. If eligible, your employer can reimburse up to 30% of your gross salary tax-free.

From January 1, 2024, the current 30% ruling will be gradually reduced in phases. This means:

• For the first 20 months, 30% of your salary can be reimbursed tax-free.
• For the next 20 months, only 20% will be tax-free.
• For the final 20 months, a maximum of 10% can be reimbursed tax-free.

After five years, the ruling will end. This reduction raised concerns among expats and employers due to the reduction in tax benefits.

Fortunately, starting in 2027, a new scheme will be introduced where the tax-free allowance will be reduced to 27% for the entire five-year period. The current 30% ruling will remain in effect until the end of 2026, providing more stability and clarity for both expats and employers.

Another change in 2027 is the increase in salary thresholds. To be eligible for the 27% ruling, you must meet a minimum salary requirement. These thresholds will increase to:

• €50,436 for employees aged 30 and above.
• €38,338 for employees under 30 with a master’s degree.

These figures are based on 2024 standards and will be indexed annually.

If you started using the 30% ruling before 2024, nothing will change for you for now. You will continue to benefit from the current 30% ruling for the full five-year period, including the existing salary thresholds, as long as the ruling is not interrupted.

If the 27% ruling does not cover your actual expenses, you still have the option for your employer to reimburse the actual extraterritorial costs. However, your employer must keep detailed records and be able to prove these expenses.

Another change that will take effect in 2025 is the abolition of the partial non-resident taxpayer status. Previously, expats could opt to be treated as non-resident taxpayers for box 2 and box 3, even if they were residing in the Netherlands. Expats who started using the 30% ruling before 2024 can still take advantage of this until the end of 2026.

The adjustment to the 27% ruling starting in 2027 is designed to make the transition smoother for expats. While the reduction from 30% to 27% may have a small impact on your tax benefits, the new ruling does offer more stability. Make sure you stay informed about these changes, especially if you plan to continue working in the Netherlands beyond 2027.

Please note:
The information in this article is intended as general information and does not constitute legal advice.The exact details of these changes will be announced in October 2024. Keep an eye on these updates to understand how they will affect your specific situation.