As an international professional coming to work in the Netherlands, the 30% ruling Netherlands is one of the most valuable tax benefits you can utilize. This ruling can make a significant difference in your net income, but the question “until when does the 30% ruling apply?” is crucial for your financial planning. The validity period depends on various factors, including when you submitted your application and whether there are changes in your work situation.
In this article, we explain how long you can benefit from this tax advantage for expats, what changes have been recently implemented, and how you can ensure you don’t miss out on any benefits. Whether you’ve just started working in the Netherlands or have been using the ruling for several years, this information will help you make well-informed decisions about your financial future.
What Exactly Is the 30% Ruling?
The 30% ruling is a tax benefit that the Netherlands offers to international employees Netherlands who bring specific expertise that is scarce in the Dutch labor market. This ruling enables employers to pay up to 30% of an employee’s gross salary tax-free as compensation for so-called extraterritorial costs.
The benefit works as follows: instead of paying tax on your entire gross salary, 30% of it is exempted from wage tax and income tax. This means you only pay tax on the remaining 70% of your salary, resulting in a significantly higher net income.
To qualify for the ruling, you must meet specific 30% ruling conditions:
- You are employed by a Dutch employer
- You possess specific expertise that is scarce in the Dutch labor market
- You were recruited from abroad
- You lived more than 150 kilometers from the Dutch border for at least 16 of the 24 months preceding your first working day in the Netherlands
- Your annual salary meets the minimum threshold
Maximum Validity Period of the 30% Ruling
The 30% ruling duration depends on when your application was approved. Over the years, various changes have been implemented that affect the maximum validity period:
| Application Approval Date | Maximum Validity Period |
|---|---|
| After January 1, 2019 | 5 years |
| Between January 1, 2012 and January 1, 2019 | 8 years |
| Before January 1, 2012 | 10 years |
The validity period is calculated from the first day you use the ruling, not from the approval date. For example, if you started working in March 2020 but only submitted the application in June 2020, the five-year term begins in March 2020.
It’s important to know that the Tax Authority can shorten the duration of your decision if you have previously lived or worked in the Netherlands. Periods during which you stayed in the Netherlands in the past are deducted from the maximum validity period, unless this was more than 25 years ago.
When Does Your 30% Ruling Expire Early?
Your 30% ruling can end earlier than the maximum term in various situations. It’s crucial to understand these circumstances to avoid unexpected tax obligations.
Change of employer is one of the most common reasons for early termination. If your employment ends, you have three months to find a new job that meets the conditions of the 30% ruling. If you don’t find a new employer within this period, your right to the ruling expires.
With a new employer, you must submit a new application, unless your new and previous employer belong to the same fiscal unity. In that case, your decision remains valid.
Other situations that can lead to early termination include:
- Moving to within 150 kilometers of the Dutch border for a period longer than permitted
- Change in your function so that you no longer meet the requirement of specific expertise
- Decrease in your salary below the minimum threshold
- Transition from employment to self-employment (although continuation is possible under certain conditions)
Changes in the 30% Ruling Since 2019
The 30% ruling has undergone significant changes since 2019 that affect both new and existing users. The most important change was the shortening of the maximum validity period from eight to five years for applications approved after January 1, 2019.
From 2024, even more far-reaching changes have been implemented:
Salary limits: There is now a maximum salary of €233,000 per year to which the 30% ruling can be applied. For income above this amount, no tax exemption applies. For employees who have been using the ruling since 2022, this limitation only applies from January 1, 2026.
Phased reduction: For new users from 2024, the percentage is gradually reduced: 30% for the first 20 months, 20% for the next 20 months, and 10% for the last 20 months. Existing users retain the full 30% percentage.
Abolition of partial foreign tax liability: From January 1, 2025, new users can no longer choose partial foreign tax liability for box 2 and box 3 income. Existing users can still utilize this benefit until 2026.
How Do You Ensure Timely Extension?
It’s important to understand that the 30% ruling is not automatically extended. The ruling applies for a fixed period as stated in your decision from the Tax Authority. When this period expires, you cannot submit a new application unless you again meet all conditions, including the requirement to have lived outside the Netherlands for 16 of the 24 months preceding your work start.
To ensure you benefit optimally from the ruling, it’s advisable to:
- Keep track of your end date: Note the exact date when your 30% ruling expires
- Report changes timely: Inform your employer and the Tax Authority about changes in your work situation
- Maintain documentation: Keep all relevant documents for potential audits
- Seek professional advice: Consult experts in global mobility compliance for complex situations
When changing employers, you must submit a new application within four months after starting your new job. If you do this within this timeframe, the ruling can take effect retroactively from your first working day with the new employer.
For international professionals dealing with complex situations regarding the 30% ruling, a global mobility compliance audit can be valuable. This service helps evaluate your current situation and identify opportunities to optimize your tax benefits within the applicable regulations.
The 30% ruling remains a valuable instrument for international talent in the Netherlands, despite recent changes. By staying well-informed about the validity period and conditions, you can maximize your benefit from this tax advantage and adjust your financial planning accordingly. For personalized guidance on your specific situation, please contact our experts.
