What is the Netherlands 30% tax ruling for expats?

The 30% ruling (30%-regeling) is a Dutch tax benefit for internationally recruited workers. It allows employees to receive 30% of their gross salary as a tax-free expense allowance, effectively reducing their taxable income to 70% of gross salary and producing significant tax savings.

What it does, exactly

Under normal Dutch tax rules, income tax is calculated on 100% of your gross salary. With the 30% ruling:

• 30% of your gross salary is treated as a tax-free reimbursement for extraterritorial costs (the costs of working in a country other than your home country)
• You pay income tax only on the remaining 70% of your gross salary
• The 30% portion is completely exempt from Dutch income tax and social security contributions

Dutch income tax rates are progressive (up to 49.5%), so for a high earner, the 30% ruling can reduce the effective tax rate substantially.

Concrete example

Who qualifies

To be eligible for the 30% ruling, all of the following must apply:

1. Recruited from abroad: You were living outside the Netherlands when you were hired and moved to the Netherlands specifically for this job.

2. Distance criterion: In the 24 months before starting work in the Netherlands, you lived more than 150km from the Dutch border for at least 16 of those 24 months. Israel is approximately 3,500km from the Dutch border, so Israeli applicants easily meet this requirement.

3. Salary threshold (2024): Your salary must exceed €46,107/year (after applying the 30% reduction, so your gross salary must be at least ~€65,867/year). Special lower threshold for employees with a Dutch master's degree: ~€35,000/year.

4. Specific expertise: You must have skills or experience that are scarce or specific. In practice, most professional roles qualify if the salary threshold is met.

5. Employment by a Dutch employer: The employer must be a Dutch entity (or a foreign employer with a Dutch payroll establishment).

How to apply

The employer applies for the 30% ruling on behalf of the employee:

1. Within 4 months of your first day of work in the Netherlands, the employer submits the application to the Dutch Tax Authority (Belastingdienst)
2. The Belastingdienst processes the application (typically 4–8 weeks)
3. If approved, a ruling letter is issued confirming the start date and duration
4. The ruling can be applied retroactively to the first day of employment if applied within the 4-month window; otherwise, only from the application date

Critical: If you miss the 4-month window, you lose some benefit. Remind your HR department to apply promptly.

Duration

The 30% ruling is available for a maximum of 5 years (reduced from 8 years in 2024). The 5-year clock starts from the day you begin working in the Netherlands.

If you have previously lived or worked in the Netherlands, any previous Dutch residence or work periods may reduce the available 5-year window.

The partial non-resident tax option

Combined with the 30% ruling, you can optionally choose partial non-resident tax status. This means:

• Your Netherlands-source income is fully taxable in the Netherlands
• Most foreign income (savings, investments outside the Netherlands) is exempt from Dutch taxation

This is especially relevant for Israelis who have investments, pensions, or financial accounts in Israel.

Changes in 2024

The Dutch government reduced the ruling period from 8 years to 5 years (effective January 2024). Employees already receiving the 30% ruling before 2024 had a transition period.

Tax optimization with the ruling

• Salary above the threshold: the 30% applies to the full gross salary
• The ruling does not affect employer costs (the employer pays normal social security contributions on the full salary)
• Consult a Dutch tax advisor about structuring stock options, bonus payments, and expatriate allowances alongside the 30% ruling

After the 5 years end

When the 30% ruling expires, you revert to standard Dutch taxation. Many expats plan their financial affairs (pension contributions, investments) around the 5-year horizon to maximize the benefit.