Expats in the Netherlands with specialist skills and a salary above a defined threshold benefit most from the 30% ruling, now formally known as the expat scheme. This tax facility allows qualifying employees recruited from abroad to receive a portion of their salary free of Dutch income tax, compensating for the higher cost of living and relocation expenses they face. The sections below address the most important questions employers and internationally mobile professionals ask about this scheme.
What conditions must an employee meet to qualify for the 30% ruling?
To qualify for the expat scheme in the Netherlands, an employee must be in salaried employment, possess specific expertise that is scarce on the Dutch labour market, earn above a defined minimum salary threshold, and have been recruited from outside the Netherlands. In addition, the employee must have lived more than 150 kilometres from the Dutch border for at least 16 of the 24 months prior to their first working day in the Netherlands.
The salary thresholds are adjusted annually. In 2026, the general minimum salary requirement is €48,013 per year, excluding any tax-free allowance. For employees under the age of 30 who hold a Dutch academic master’s degree or an equivalent qualification obtained abroad, a reduced threshold applies: in 2026, this is set at €36,497 per year.
Two categories of employees are exempt from the salary requirement entirely:
- Employees conducting scientific research at a designated research facility
- Doctors undertaking specialist training
It is also important to note that the expat scheme is distinct from the highly skilled migrant permit issued by the Immigration and Naturalisation Service (IND). The expat scheme is a tax benefit administered through the employer and the Dutch Tax Administration; the highly skilled migrant permit is a separate residence permit. Employers must apply for formal approval, a beschikking, from the Tax Administration within four months of the employee’s first working day. The application must be accompanied by supporting documents such as employment contracts and proof of qualifications.
Which sectors and job roles benefit most from the 30% ruling?
The expat scheme is sector-neutral in principle, but in practice it benefits industries that actively recruit internationally for specialist roles. Technology and ICT, financial services, life sciences, engineering, and the legal and professional services sectors are among those that most frequently rely on the scheme. Senior executives, data scientists, software engineers, medical specialists, and researchers are among the job roles that most commonly meet the salary and expertise criteria.
The scheme is particularly valuable in sectors where Dutch employers compete globally for talent. For expats in the Netherlands, the financial advantage of receiving a portion of their salary tax-free can be a decisive factor when evaluating a role in Amsterdam or another Dutch city against an offer elsewhere in Europe.
Retail, fashion, and luxury goods companies with international headquarters or European operations in the Netherlands also make regular use of the scheme when bringing in senior creative, commercial, or operational staff from abroad. The same applies to hotel groups and hospitality businesses that recruit internationally at management level.
How does the 30% ruling affect net salary compared to standard Dutch taxation?
Under the expat scheme, a qualifying employer can pay up to 30% of an employee’s salary tax-free, in lieu of reimbursing actual extraterritorial costs. This means that a significant portion of gross earnings is shielded from Dutch income tax, which can result in a materially higher net salary compared to standard Dutch payroll taxation. As of 2026, the maximum untaxed allowance is €78,600, which applies to employees earning €262,000 or more annually.
The practical impact on take-home pay depends on the individual’s total remuneration and tax bracket. Dutch income tax rates are progressive, so the scheme is proportionally more valuable for higher earners. However, employers are not obliged to apply the full 30%; the actual tax-free percentage may be lower, and this should be agreed in writing before the scheme is applied.
It is worth noting that since 1 January 2025, employees using the expat scheme can no longer opt for partial foreign tax liability in their income tax return. Previously, expats could be treated as non-resident taxpayers for income from substantial interests (Box 2) and savings and investments (Box 3), which reduced their taxable income from foreign capital. This option has now been removed for new applications, and transitional arrangements apply only in limited circumstances.
Given the complexity of these interactions, the net salary effect of the scheme varies considerably depending on individual circumstances. Consulting a qualified tax adviser is advisable before drawing conclusions about the precise financial benefit.
Can directors and shareholders of their own company use the 30% ruling?
Directors and shareholders who are also employees of their own company can in principle qualify for the expat scheme, provided they meet all the standard conditions: salaried employment, specific expertise, the minimum salary threshold, and recruitment from outside the Netherlands. The scheme does not automatically exclude director-shareholders, but the employment relationship and the salary arrangement are subject to scrutiny by the Dutch Tax Administration.
In practice, the Tax Administration will assess whether the employment is genuine and whether the salary meets the statutory minimum. For directors of their own company, the gebruikelijk loon rules, which set a minimum deemed salary for director-shareholders, interact with the expat scheme requirements. This creates a layer of complexity that makes professional advice particularly important for this group.
Directors and executives considering the scheme should also be aware that the tax-free allowance applies only to the salary component, not to dividends or other distributions. Any arrangement that attempts to reclassify dividend income as salary to maximise the tax-free benefit is likely to attract scrutiny. Specific legal and tax advice is essential before structuring remuneration in this context.
What happens to the 30% ruling after recent legislative changes?
The expat scheme has undergone significant legislative changes in recent years, and further amendments are planned. The most important changes depend on when the employee first became eligible for the scheme.
For employees who began using the scheme before 1 January 2024, the original rules continue to apply for the full five-year period: employers may pay up to 30% of salary tax-free. For employees who became eligible after 1 January 2024, the following changes apply:
- Reduction of the tax-free percentage: As of 1 January 2027, the maximum tax-free reimbursement will be reduced from 30% to 27% of salary.
- Introduction of a salary cap: The tax deduction may only be applied up to the maximum remuneration level set under the Wet Normering Topinkomens (the so-called Balkenende norm), which is adjusted annually.
- Removal of partial foreign tax liability: Since 1 January 2025, employees using the scheme can no longer file as partial foreign taxpayers for Box 2 and Box 3 income.
The scheme’s maximum duration remains five years, reduced from ten years under earlier legislation. Employers and employees should monitor ongoing legislative developments closely, as further changes may affect the scheme even during an active five-year period. Consulting a specialist regularly is the most reliable way to remain compliant and informed.
When should an employer factor the 30% ruling into international recruitment?
Employers should consider the expat scheme at the earliest stage of international recruitment, ideally when structuring the compensation package and drafting the employment offer. The scheme can be a meaningful differentiator when competing for internationally mobile talent, and its financial value should be clearly communicated to prospective employees during negotiations.
Key moments in the recruitment process where the scheme is relevant include:
- Assessing whether a candidate’s profile and salary level meet the eligibility criteria before making an offer
- Agreeing in writing on whether the employer will apply the tax-free percentage or reimburse actual extraterritorial costs; this choice must be made at the start of each payroll year
- Filing the application with the Dutch Tax Administration within four months of the employee’s first working day
- Planning for continuity if the employee changes role within the company or moves to a connected employer
If an employee changes employer, the scheme does not transfer automatically. A new application must generally be submitted, though if the employee starts with the new employer within three months and the application is filed within four months of the start date, the scheme can be applied from the first working day at the new employer. Within a connected group of withholding agents, the existing decision may remain valid without a new application.
Employers operating in Amsterdam who recruit internationally, whether for corporate, retail, hospitality, or professional services roles, should treat the expat scheme as a standard element of their international HR strategy rather than an afterthought.
How Russell Advocaten Supports Expats in the Netherlands
Russell Advocaten Amsterdam is an internationally oriented law firm with over 80 years of experience advising businesses, directors, and individuals on a wide range of legal matters in the Netherlands. For expats and the employers who recruit them, the firm offers practical legal support across the areas that matter most when relocating to or operating in the Netherlands.
The firm’s lawyers communicate fluently in English, Dutch, and German, which is a significant practical advantage for international clients navigating Dutch legal and regulatory requirements. Russell Advocaten is also an official partner of IN Amsterdam, the expat centre of the City of Amsterdam, reflecting the firm’s long-standing commitment to the international community in the capital.
Russell Advocaten can assist with:
- Employment contracts and remuneration structuring for internationally recruited staff
- Legal advice on setting up or expanding a business in the Netherlands
- Real estate and rental matters, including guidance relevant to those renting a house in the Netherlands as an expat
- Immigration and residence permit questions, including support for directors, shareholders, and senior executives
- Contract review and negotiation across corporate, commercial, and employment contexts
Whether you are an employer structuring an international hire or an expat seeking clarity on your legal position in the Netherlands, Russell Advocaten provides the expertise and language capability to guide you through the process. Contact Russell Advocaten to discuss your situation with one of our specialists.
This information is general in nature and does not constitute legal advice for your specific situation. Please consult a lawyer at Russell Advocaten for advice tailored to your circumstances.
Veelgestelde vragen
What happens if the application for the 30% ruling is filed after the four-month deadline?
If the employer misses the four-month filing window from the employee’s first working day, the scheme can still be granted, but it will only take effect from the first day of the month following the month in which the application was submitted. This means the employee loses the tax benefit retroactively for the period between their start date and the late application — a potentially costly oversight. To avoid this, employers should initiate the application process as soon as the employment contract is signed, ideally before the employee’s first working day.
Can the 30% ruling be applied if an employee is hired on a temporary or fixed-term contract?
Yes, the expat scheme can apply to employees on fixed-term contracts, provided all eligibility conditions are met, including the minimum salary threshold, the 150-kilometre distance rule, and recruitment from abroad. However, the five-year maximum duration of the scheme runs from the first working day regardless of contract type, so employees on shorter contracts should factor this into their planning if they anticipate contract renewals. It is also worth noting that the scheme ends automatically if the employment relationship is terminated before the five-year period expires.
Does the 30% ruling apply to bonuses, holiday allowances, and other variable pay components?
In principle, the tax-free allowance can be applied to all salary components that form part of the agreed remuneration, including bonuses and holiday allowances, as long as the total tax-free portion does not exceed 30% (or 27% from 2027) of the taxable wage and the annual salary cap set under the Balkenende norm. However, the precise application depends on how the remuneration is structured and agreed in writing with the employer. Given the complexity of variable pay arrangements, it is advisable to seek specialist tax advice to ensure the scheme is applied correctly across all pay components.
What is the difference between the 30% ruling and reimbursing actual extraterritorial costs, and which is better?
The 30% ruling is a flat-rate option that allows employers to pay up to 30% of an employee’s salary tax-free without needing to itemise or evidence specific costs. The alternative is to reimburse actual extraterritorial costs — such as relocation expenses, language courses, or double housing costs — on a tax-free basis, but only to the extent those costs can be substantiated with receipts and documentation. For most employees earning above the salary threshold, the flat-rate 30% option is more advantageous and administratively simpler. However, for employees with very high actual extraterritorial costs or lower salaries, a detailed cost comparison is worthwhile before making the election, as the choice must be made at the start of each payroll year and cannot be changed mid-year.
If an expat leaves the Netherlands temporarily or works partially from abroad, does the 30% ruling remain valid?
The 30% ruling is tied to the employment relationship with a Dutch withholding agent, not to physical presence in the Netherlands on any given day. Short-term international travel or hybrid working arrangements that include days worked abroad do not automatically invalidate the scheme. However, if an employee relocates abroad permanently or their employment with the Dutch employer ends, the scheme ceases to apply. In cases involving significant cross-border working arrangements, the interaction with tax treaties and social security rules can become complex, and specialist advice is recommended to avoid unintended tax consequences.
Are there any common mistakes employers make when administering the 30% ruling on payroll?
One of the most frequent errors is applying the tax-free percentage to the full gross salary without checking whether it exceeds the annual salary cap tied to the Balkenende norm — particularly relevant for high earners after the 2024 legislative changes. Another common mistake is failing to document in writing the agreement between employer and employee on whether the flat-rate ruling or actual cost reimbursement will be used, which is required at the start of each payroll year. Employers also sometimes continue applying the scheme after the five-year period has expired or after the employee has left the company. Regular internal payroll audits and coordination with a tax adviser can help prevent these issues before they attract scrutiny from the Dutch Tax Administration.
Can family members who relocate with the expat also benefit from the 30% ruling?
The 30% ruling is an individual benefit tied to the qualifying employee’s employment relationship and cannot be transferred to or shared with family members. However, accompanying family members may benefit indirectly, as the employee’s higher net income can offset the household costs associated with international relocation. Family members who are themselves employed in the Netherlands and meet all eligibility criteria independently — including the salary threshold and the 150-kilometre distance rule — may apply for the scheme in their own right through their own employer.
Gerelateerde artikelen
- What happens to your Dutch residence permit if you lose your job?
- What rights do expats have as tenants in the Netherlands?
- How long does it take to register a company in the Netherlands?
- How many years do you need to live in the Netherlands to become a citizen?
- Do expats in the Netherlands have to pay taxes?
Deze inhoud is gegenereerd met behulp van AI en kan fouten bevatten.