As an international professional moving to the Netherlands, you will undoubtedly encounter various tax benefits. Two terms that are often used interchangeably are the 30% ruling and the expat scheme. While these concepts are closely related, there are important differences that you must understand to make the right choices. This guide helps you navigate through the complex Dutch tax legislation and shows you exactly which scheme best suits your situation.
For highly educated professionals working in the Netherlands, these schemes can provide significant financial advantages. However, it is crucial to understand that both schemes come with different conditions, benefits, and risks. A wrong interpretation can lead to compliance problems or missed opportunities.
What exactly is the 30% ruling?
The 30% ruling, officially known as the Expat Scheme or 30% facility, is a Dutch tax facility specifically designed for international employees. This scheme allows employers to pay up to 30% of an employee’s gross salary tax-free as compensation for extraterritorial costs.
In practice, this means that your gross salary for tax purposes is reduced from 100% to 70%, making 30% of your salary effectively tax-free. This facility is intended as compensation for the extra costs that international employees incur when they move to and work in the Netherlands.
The extraterritorial costs covered under this scheme include:
- Application costs for residence permits, visas, and driving licenses
- Hotel costs during the transition period
- Travel and communication costs to the home country
- Dutch language courses
- Housing costs such as rent and utilities
From 2024, important changes have been implemented. For new applicants, a phased reduction applies: 30% for the first 20 months, 20% for the next 20 months, and 10% for the last 20 months. Additionally, a maximum salary of €233,000 per year has been established to which the scheme can be applied.
Expat scheme versus 30% ruling: the core differences
This is where confusion often arises: the expat scheme and the 30% ruling are in fact the same scheme. The official name is “Expat Scheme” or “30% facility”, but in practice both terms are used interchangeably to refer to the same tax benefit.
The confusion arises because different organizations and advisors use different names. Some speak of the “30% ruling” because of the percentage, others use “expat scheme” because it is specifically designed for expats.
| Aspect | 30% Ruling | Expat Scheme |
|---|---|---|
| Official name | 30% facility | Expat Scheme |
| Legal basis | Identical | Identical |
| Conditions | Identical | Identical |
| Tax benefit | Up to 30% tax-free | Up to 30% tax-free |
| Duration | Maximum 5 years | Maximum 5 years |
| Target group | International employees | International employees |
It is important to understand that when people speak about differences between these schemes, they may be referring to different aspects of the same scheme or to other tax benefits available to international employees in the Netherlands.
Conditions and criteria for both schemes
Since the 30% ruling and expat scheme are the same scheme, the same conditions also apply. To qualify for this Dutch tax scheme, you must meet the following criteria:
Salary thresholds 2025
You must have specific expertise that is scarce in the Dutch labor market. This is demonstrated by meeting the following salary thresholds:
- General threshold: €46,660 per year (70% of gross salary)
- Threshold for employees under 30 with a master’s degree: €35,468 per year (70% of gross salary)
Distance criterion
You must have lived for at least 16 months out of the 24 months prior to your first working day in the Netherlands at more than 150 kilometers from the Dutch border (measured as the crow flies). This means you may not have lived in Belgium, Luxembourg, or certain parts of Germany, France, or the United Kingdom.
Employer requirements
Your employer must:
- Withhold payroll tax on your salary in the Netherlands
- Provide a written declaration that your skills are scarce in the Dutch labor market
- Demonstrate that they have not succeeded in finding a comparable employee locally
Maximum duration and salary cap
The scheme applies for a maximum of 5 years and from 2024 can only be applied to a maximum salary of €233,000 per year. For existing users who have been using the scheme since 2022, this cap only applies from 2026.
Which scheme best suits your situation?
Since the 30% ruling and expat scheme are the same scheme, it is not about choosing between the two, but about determining whether you qualify and how you can optimally utilize the scheme.
Scenario 1: Young professional with master’s degree
Are you younger than 30 and do you have a master’s degree? Then you benefit from the lower salary threshold of €35,468. This makes the scheme more accessible for starting professionals.
Scenario 2: Experienced specialist
As an experienced professional with a salary above €46,660, you qualify for the general scheme. The higher your salary, the greater the absolute tax benefit.
Scenario 3: High earner
Do you earn more than €233,000 per year? Then the scheme is only applied to the first part of your salary up to this amount. The benefit is then capped at €69,900 per year (30% of €233,000).
When evaluating your situation, it is advisable to have a Global Mobility Compliance Audit conducted. This helps you optimize your current processes and ensure that you are fully compliant with all regulations.
Common mistakes and compliance risks
Navigating through the complex Dutch tax legislation brings various risks. Here are the most common mistakes and how you can avoid them:
Misunderstanding about terminology
The biggest mistake is thinking that the 30% ruling and expat scheme are different schemes. This can lead to confusion in applications and communication with the Tax Authority.
Incorrect calculation of the distance requirement
Many applicants calculate the 150-kilometer distance incorrectly. It is about distance measured as the crow flies, not travel distance. Use official tools to calculate this correctly.
Incomplete documentation
Make sure you have all required documents complete:
- Valid identity document
- BSN number
- Employment contract or secondment letter
- Proof of residence in another country prior to the appointment
- Curriculum vitae with clear work experience
Timing of the application
Submit your application within four months of the start of your work activities to get retroactive application. After this period, the scheme only applies from the first day of the month after approval.
Ignoring changes in legislation
The scheme undergoes regular changes. Stay informed about updates such as the phased reduction for new applicants from 2024 and the elimination of partial foreign tax liability from 2025.
By avoiding these common mistakes and proactively addressing compliance risks, you can optimally benefit from the tax advantages that the Netherlands offers to international professionals. It is advisable to regularly evaluate your situation and take timely action when changes occur in your circumstances. For professional guidance on your specific situation, please contact our expert team to ensure you maximize your benefits under the 30% ruling scheme.
