30% ruling changes: further limitations

Broadstreet - News - - 30% ruling changes: further limitations

November 7th, 2023

As of 1 January 2024, the 30% ruling for highly-skilled employees recruited from abroad will be reduced further if it is up to the parliament. In a recently adopted amendment the 30% ruling benefit will be lowered to 20% of gross salary tax free after 20 months, and to 10% tax free after another 20 months. Also, the choice to be treated as a partial non-resident will disappear.   

In August 2023 it was already decided to cap the maximum gross on which the 30% ruling can be applied at EUR 223,000.     


From 30% to 10% tax free in 2 steps 

At present, employees benefiting from the 30% ruling receive a maximum of 30% of their gross salary tax free, during a maximum period of five years. The 30% ruling is intended to compensate for any additional expenses when coming to work in the Netherlands (extraterritorial expenses such as travel and accommodation expenses).  

The 30% ruling will now be further reduced: during the first 20 months of the five-year period 30% of the salary can be paid tax-free, during the next 20 months this percentage will drop to 20% and during the last 20 months 10% of the salary is tax-free.  

Transitional rules will apply to employees already under the 30% ruling in December 2023; They will continue to benefit from the 30% tax free for the full 5 years.  

Partial foreign taxpayer status abolished  

Currently, employees who reside in the Netherlands and under the 30% ruling can choose to be treated as “partial non-resident”.  This means that they are not taxed in Box 2 (income from a non-NL substantial interest) and Box 3 (income from savings and investment).  

This option will be abolished as of January 1, 2025. Employees who were already under the 30% ruling by end of 2023 will still benefit from the partial non-resident status through to the 2026 income tax return (to be filed early 2027). 

30% ruling capped  

As of January 1, 2024 the 30% ruling can no longer be applied to salaries exceeding the public sector pay cap (in 2023: EUR 223,000). For employees already under the 30% ruling per  December 2022, the pay cap will not apply as of January 1, 2024 but as of January 1, 2026.  

Option for 30% ruling or reimbursement of actual expenses  

As of January 1, 2023, employers can each year opt to either apply the 30% ruling or reimburse, on an expense claim basis, the actual extraterritorial expenses incurred by the employee.