What Is the Expat Scheme?

The 30% ruling, officially known as the Expat Scheme, is a tax advantage designed for highly skilled foreign workers in the Netherlands. Under this scheme, employers can grant up to 30% of an employee’s salary as a tax-free allowance to help cover the additional costs associated with relocating or living abroad. These “extraterritorial costs” typically include expenses such as travel, housing, utilities, and visa processing.

Who Qualifies for the 30% Ruling?

To apply for the 30% ruling, the employee must satisfy several conditions:

Paid Employment

The employee must be on the payroll of a Dutch employer.

Highly Skilled Expertise

The worker must possess specialized expertise that is scarce in the Dutch labor market. This is assessed through a minimum annual income threshold (excluding the allowance):

1. In 2025: over €46,660
2. In 2024: over €46,107
3. In 2023: over €41,954

For professionals under 30 with a Dutch or equivalent international master’s degree, the minimum salary required is lower:

1. In 2025: over €35,468
2. In 2024: over €35,048
3. In 2023: over €31,891

Scientific Research or Medical Training

If the employee is conducting scientific research at a recognized facility or is a doctor in specialist training, they are eligible regardless of income level.

Recruitment From Abroad

The employee must be recruited from outside the Netherlands — this includes those coming from Aruba, the BES islands, Curaçao, or Sint Maarten.

Residence Rule

The employee must have lived at least 150 kilometers (as the crow flies) from the Dutch border for at least 16 of the 24 months before starting work in the Netherlands. However, there are exceptions for those who previously used the 30% ruling, PhD candidates, and others, under certain conditions.

Valid Decision from the Dutch Tax Administration

Employers must apply for a formal decision (beschikking) from the Belastingdienst. The ruling can be granted for up to five years, though prior work or residence in the Netherlands may affect the duration.

How the 30% Ruling Works for Employers

As an employer in the Netherlands, you have two options for applying the 30% ruling for your highly skilled employees:

1. Tax-Free Salary Allowance: Pay up to a percentage of your employee’s salary (previously 30%) tax-free.
2. Reimbursement: Fully reimburse reasonable extraterritorial costs as work-related expenses.

You decide which method to use each year, when filing payroll, for a maximum of five years.

Recent and Upcoming Changes

1. Reduction in Tax-Free Allowance: Starting January 1, 2027, the maximum tax-free percentage will decrease from 30% to 27% for new applicants.
2. Earnings Cap: The 30% ruling is capped at a maximum annual salary (Balkenende-norm), which is periodically adjusted by law.
3. Termination of Partial Foreign Tax Liability: As of January 1, 2025, expat employees eligible for the 30% ruling can no longer opt for a partial foreign tax liability status on their tax return. A transitional rule applies for those who used the scheme in 2023.

How to Apply

To apply, follow these steps:

1. Complete the application for the 30% ruling with your employee.
2. Submit it to the Dutch Tax Administration within four months after their first working day in the Netherlands.
3. Provide supporting documents (employment contract, proof of qualifications, etc.).
4. Expect a decision (beschikking) within eight weeks.

Important Notes

1. The maximum untaxed allowance for 2025 is €73,800, which applies if the employee’s salary is at least €246,000.
2. The allowance is pro-rated if the 30% ruling is used for only part of the year.
3. Extraterritorial costs that are not covered include expatriate bonuses, capital losses, home-buying costs, and more.
4. The eligibility period for the ruling is generally five years, but this may be reduced if the employee has previously lived or worked in the Netherlands under certain conditions.