30% ruling new rules in 2025

The 30% ruling until last year was a fixed income tax break of 30% on an expat employee’s salary above a certain threshold amount (€ 46,107 in 2024). Although often considered a part of the salary, the 30% ruling is in fact a cost compensation scheme. The tax break is meant as compensation for expats’ so-called “extraterritorial costs”, a catch-all term for any cost associated with expats having to relocate to the Netherlands to pursue not only their careers but also their new livelihoods there.

The 30% ruling has always been under a lot of scrutiny, especially from domestic employees who receive the exact same salary but take home less because they pay full taxes on it. At the end of last year therefore an amendment to the 30% ruling was accepted effective 2024, that would lead to a 30-20-10% gradual scale back of the tax exemption over the course of three 20-month periods. The partial non-resident tax status for foreign Box 3 taxation was gradually to be abolished, effective 2027. 

The new Dutch government, being in general pretty eager to put the blame on foreigners for any ailment, was widely expected to either uphold or further downscale the 30% rules in 2024. Meanwhile however, large Dutch companies such as ASML, who are dependent on expat workers, have urged Dutch politicians to reconsider this year’s 30% ruling scalebacks. On June 14th, 2024 a research paper was submitted to the Dutch government. This paper discussed the merits of the original 30% ruling rules, the 2024 scalebacks and the partial non-resident status. The conclusion of the report was that the original (full 5 years) tax break was preferable over the 2024 scalebacks (30-20-10%), from an economical perspective. It signaled the expectation that many employees will switch to the actual territorial cost reimbursement possibility (for which the 30% tax exemption was a flat-rate measure), from the moment the 20% tax break drops to 10%. This would result in additional administrative burdens to employers at no benefit to the treasury.

Meet the new rules
On Princesday 2024, we are confronted with a new expat tax break. Meet the 27% ruling, formerly known as the 30% ruling. Instead of tiered scalebacks, we are now looking at one 5-year flat rate of 27% as an income tax break for incoming expat employees. The new rules will take effect for all employees effective January 1st, 2027. Before then, everybody will have the full 30% tax break, including those that previously fell under the 2024 tiered regime of 30/20/10 percent over 5 years. That is, until the government decides to change it again of course.

Partial non resident tax status
The partial non-resident tax status conferred by the original 30% ruling will remain scaled back. 30% ruling holders starting in 2024 will have their partial non-resident tax status revoked as of 2025 and further. A separate transitional arrangement applies here as well : 30% holders from before January 1st, 2024 will have their partial non-resident tax status revoked only as of 2027 and further. So 2026 is the last year of partial non-resident tax status for everybody.

New minimum threshold
Each year the 30% ruling minimum threshold gets adjusted for inflation. In 2025 the minimum salary will be € 50,436. It was € 46,107 in 2024. That means that in 2025 you will only be able to apply the 30% ruling to your salary above € 50,436. That means you will have to earn €72,051 per year in order to have the full benefits of the 30% ruling in 2025.

For more information on the 30% ruling in the Netherlands, check our FAQ page