The 30%-Ruling

Employees who have been hired from abroad can, under certain conditions, benefit from the 30%-ruling regime, which allows 30% of their employment income to be allocated for the tax-free compensation of specific expatriate expenses (referred to as ‘extraterritorial expenses’).

In principle, the compensation of these extraterritorial expenses is based on your actual costs. However, if you meet certain requirements you can qualify for the 30%-regulation.

Extraterritorial Expenses

Your employer can reimburse extraterritorial expenses that you incur as a result of your (temporary) stay outside your home country in connection with employment in the Netherlands, free of tax. In other words, these must be expenses that you would not have incurred if you had remained working in your home country, such as for example:

  • Cost Of Living Allowance (‘COLA’)
  • Househunting / acquaintance trip expenses
  • Double housing costs
  • Extra housing costs
  • Home leave tickets
  • Costs made in connection with arranging visas, permits, host country income tax returns
  • Language courses.


To qualify for the application of the 30%-ruling, you should meet the following criteria:

  1. You have been hired from abroad or sent to work for an employer in the Netherlands.
  2. You have been living at least 150 kilometres from the Dutch border (for two-thirds of a 24-month period prior to starting your work activities in the Netherlands)[1]
  3. You are paid through a Dutch payroll, i.e. the salary must be subject to Dutch wage withholding tax.
  4. You have specific expertise that is not or scarcely available on the Dutch labour market. The condition that you have this specific expertise will normally be considered to have been met if you earn a minimum gross salary of at least € 35,770 (excluding the tax-free allowance of the 30%-ruling). If you are younger than 30, have a master’s degree and are a recruited from abroad, a reduced salary threshold of € 27,190 applies (excluding the tax-free allowance of the 30%-ruling). Academic scientists are exempt from a salary threshold.

A doctoral student who is employed in the Netherlands within one year after obtaining his PhD can also opt for the 30%-ruling. The time spent in the Netherlands working on the PhD will not be taken into account for the determination whether the 30%-ruling is applicable. Furthermore there is no salary threshold.


The 30%-ruling should be requested with the tax authorities. To have the 30%-ruling apply as of the start date of the Dutch employment, the request should be filed within four months after starting your work activities in the Netherlands. If the request is filed after the four-month period, the 30%-ruling is granted as of the month following the month in which the request for the 30%-ruling was filed.

If you change jobs and already have the 30%-ruling, you can continue it, provided the period between jobs does not exceed three months. A new request should be submitted for its application within four months of starting in the new employment position.

Period of Applicability

The ruling is granted for a maximum period of 96 months (eight years). This period could be reduced by any previous period(s) of employment in the Netherlands, or by any time previously spent in the Netherlands.

Please note that you should meet the conditions of the 30%-ruling during the entire period of its application. As soon as the conditions are no longer met, the 30%-ruling will cease to apply. To rulings that have already been granted, transitional rules will apply.

Transitional Rules

Transitional rules include that the current terms and conditions of the 30%-ruling will continue to apply to those situations in which the 30%-ruling was granted more than five years ago on January 1, 2012. For rulings that were granted five years ago or less on that date, the salary threshold must be met as of the 61st month of application. Moreover, you must also have met the 150-kilometre rule the moment your employment in the Netherlands started.

After Employment Termination

The 30%-ruling is, with retroactive effect until January 1, 2012, only applicable until the last day of the month after the last month of employment. For instance, if your employment contract ended July 8, 2013 and you receive an additional payment in September 2013, the 30%-ruling will not apply to this payment.

Tax Status

Resident Taxpayer

If you live and work in the Netherlands, you will be considered a resident taxpayer. A resident taxpayer in principle owes tax over his worldwide income. This worldwide income is divided into three Boxes:

–          Box 1 includes income from employment (including pension payments and life annuities) and the own house (principal place of residence). Box 1 income is taxed against a progressive tax rate up to 52%.

–          Box 2 includes income from a substantial interest in a company (5% or more together with close relatives). Box 2 income is taxed against a flat rate of 25%.

–          Box 3 includes income from savings and investments. According to Dutch income tax law, of the value at the beginning of the year (January 1), 4% is considered deemed income. The deemed income is taxed against a flat rate of 30%. Therefore, the average net wealth is actually taxed against a flat rate of 1.2%. Actual interest, dividends or rental income are not subject to tax.

Partial Non-Resident Taxpayer

Under the 30%-ruling you can choose to be treated as a partial non-resident taxpayer, even though you actually live in the Netherlands. As a partial non-resident, you will be considered a resident taxpayer for Box 1 (income from employment and own house). However, for income from Box 2 (income from a substantial interest in a company) and Box 3 (income from savings and investments) you will be considered a non-resident taxpayer. As a result, the income that should be reported in Box 2 and Box 3 will be very limited. For instance, in Box 3, in practice, only real estate in the Netherlands that is not used as the principal place of residence should be reported. All other passive income remains tax-free.

Expats to whom the 30%-ruling applies and who are living in the Netherlands are entitled to the same personal allowances and tax credits as residents of the Netherlands. A request to the tax authorities to be treated as a partial non-resident taxpayer can be filed with the tax return for the year concerned. The choice can be revised every calendar year.


[1]Please note that for this condition various cases have been brought before the Dutch courts, and depending on the outcome, this could change in future

Kees de Graaf
2013 Autumn

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