The 30% ruling amended

Posted on 1st January, 2012

Estimated reading time 3 minutes

Under Dutch law expatriates working in the Netherlands may be entitled to tax-free compensation equal to 30% of their gross remuneration.  This law has now been subject to a number of amendments.

The Dutch Parliament has amended legislation governing the so-called 30% ruling which became effective on January 1, 2012.  Please note that extensive transitional provisions are applicable for those employees where the 30% ruling was applied in the payroll on or before December 31, 2011.

Under the Dutch Wage Tax Act employees may qualify for a tax-free allowance to cover expatriate expenses (the so-called ‘extra-territorial expenses’).  If a number of specific conditions are met the foreign employee will be entitled to tax free compensation for the extra-territorial expenses amounting to 30% of the employee’s gross remuneration.  This ruling applies to employees who come from abroad to work in the Netherlands, and have a specific expertise that is not, or is only scarcely, available on the Dutch labour market.

In order to apply for the 30% ruling a formal request needs to be submitted jointly by the employee and the employer to the Dutch tax authorities.  The request has to be filed within four months following the commencement of the employment to have retroactive effect.  The ruling can only be applied if the tax authorities formally accept the request by issuing a formal decree.

Coming from abroad

In principle, only foreign employees who come to the Netherlands from another country to work in the Netherlands qualify for the 30% ruling.  The employee should either be posted to the Netherlands or recruited from outside the Netherlands.

Another requirement that needs to be met is that the employee resided more than 150 km from the Dutch border during more than two thirds of the 24 month period preceding the commencement of their employment in the Netherlands.

The salary standard and specific expertise

The specific expertise will be determined by reference to a salary standard from January 1, 2012.  If the taxable annual salary of an employee exceeds € 35,000 (exclusive of the 30% allowance), the employee is deemed to have a specific expertise.  For scientific researchers who work for educational institutions or subsidised research facilities and medical specialists who meet certain registration requirements, there is no salary standard.  The salary standard for people under the age of 30 who hold a Master’s degree is € 26,605 (excluding the 30% ruling).


In addition to the salary standard the employee’s specific expertise must only be sparsely available in the Dutch labour market.  This scarcity is subject to confirmation, especially in cases where similar positions are customarily rewarded with a salary well above the standard of € 35,000.

Term of the 30% ruling

Previously, the maximum period of validity of the 30% ruling was 10 years.  This maximum period of validity was reduced to 8 years from January 1, 2012.

Reduction period of 25 years

All periods of earlier stay or work in the Netherlands which ended within 25 years of the start of the employment in the Netherlands will be deducted from the 8 year period.

Payments following the expiry of the 8 year term

The 30% ruling ceases to apply to payments made to an employee following the expiry of the 8 year term, unless the entitlement to this payment is unconditional upon the end of the term.

For further information or to discuss any of the issues raised, please contact Hans van Ruiten on + 31 10 224 64 18, Peter Bos on + 31 20 578 56 23 or Marieke de Vries on + 31 20 678 51 76.