New changes to the 30% ruling for expats: what does this mean?

Foreign employees (expats) in the Netherlands receive a tax-free allowance from their employer under certain conditions. This is known as the 30% ruling and compensates for additional costs such as housing and travel expenses. The Netherlands aims to remain attractive to international talent while keeping the scheme financially manageable. The government will amend the 30% ruling from 2027.

Expats who work in the Netherlands on a temporary basis and earn more than €46,660 per year (2025) may receive a tax-free allowance for five years under certain conditions. They will receive this allowance on a maximum of €246,000 per year (2025). The employer pays the allowance and arranges the tax exemption with the Tax and Customs Administration. Further changes to the expat scheme have been announced. The previously planned phase-out from the 2024 Tax Plan will be largely reversed. In 2025 and 2026, the tax-free allowance will remain at a maximum of 30%. From 2027, this will be reduced to 27% and a higher salary threshold will also apply. A transitional arrangement will apply to employees who have been using the scheme since 2023.

What was planned for January 1, 2024 (but has been amended)
Previously, a phasing-out scheme was to apply to new users from January 1, 2024. This phase-out scheme has now been scrapped for 2024. The tax-free allowance was to be phased out over five years in three phases of 20 months:

• 30% in the first 20 months
• 20% in the following 20 months
• 10% in the last 20 months

What applies now (2024–2026)?

• The allowance will remain at 30% for the entire five-year period.
• The scheme applies to salaries up to a maximum of €246,000 in 2025 (Top Income Standardization Act (WNT), also known as the “Balkenende” standard).
• This adjustment applies to employment contracts concluded on or after January 1, 2024.

What will change from 2027?

• The maximum tax-free percentage will be reduced from 30% to 27%.
• The minimum salary threshold for participation will increase to €50,436 per year (adjusted and indexed annually). This standard was set in 2024 and is therefore subject to change.
• For expats who already started the scheme in 2023, the old scheme will continue to apply until the end of 2026 (transitional law). They will still be able to receive up to 30% of their salary tax-free for 5 years.

Transitional scheme at a glance

*This new salary standard will be set in 2024 and may be adjusted.

What does this mean for employers and expats?
The 30% ruling attracts highly educated expats to the Netherlands, especially in technology, science, and finance. With fewer tax benefits, net incomes for expats will decrease, while companies will find it more difficult to recruit and retain international talent. Many employers are looking for alternative compensation, such as higher net salaries or additional fringe benefits.

Questions?
Would you like to know what these changes mean for your organization? Please contact us at info@meijers.nl or call +31 20 642 0524. We would be happy to assist you.