{"id":14385,"date":"2025-01-05T15:42:40","date_gmt":"2025-01-05T15:42:40","guid":{"rendered":"https:\/\/practical.nl\/?p=14385"},"modified":"2025-01-05T15:42:42","modified_gmt":"2025-01-05T15:42:42","slug":"the-30-ruling-in-the-netherlands","status":"publish","type":"post","link":"https:\/\/practical.nl\/en\/the-30-ruling-in-the-netherlands\/","title":{"rendered":"The history and purpose of the 30% ruling in the Netherlands"},"content":{"rendered":"\n

The 30% ruling is one of the most well-known tax benefits in the Netherlands for expats and international employees. This scheme is designed to make it more attractive for foreign workers to come to the Netherlands for work. In this blog, we take a look at the history of the 30% ruling, its original purpose, and how it has evolved over the years. We also discuss the impact of the scheme on both employees and employers.<\/p>\n\n\n\n

<\/div>\n\n\n\n
\"\"<\/figure>\n\n\n\n

What is the 30% ruling?<\/h4>\n\n\n\n

The 30% ruling allows foreign employees relocating to the Netherlands for work to receive up to 30% of their gross salary tax-free. This tax-free portion is intended as compensation for the extra costs incurred when moving from abroad to the Netherlands. These costs include housing, relocation, and other additional expenses (extraterritorial costs).<\/p>\n\n\n\n

The scheme is attractive to both employers and employees. Employers can attract talent from abroad without needing to compensate with higher gross salaries, while employees benefit from significant tax savings.<\/p>\n\n\n\n

<\/div>\n\n\n\n

How to apply for the 30% ruling<\/h4>\n\n\n\n

To apply for the 30% ruling, you must meet certain conditions, such as a minimum salary and having lived outside a 150-kilometer radius from the Dutch border in the 24 months prior to employment. Want to know how to navigate this process? Learn more about our tax advisory services<\/a> and contact us for guidance.<\/p>\n\n\n\n

<\/div>\n\n\n\n

The origin of the 30% ruling<\/h4>\n\n\n\n

The 30% ruling originated in the 1960s. During this period, the Netherlands was developing into an international trade hub, and there was a clear need for specialized labor from abroad. The government introduced a tax scheme to offset the additional costs incurred by foreign employees, then referred to as \u201cextraterritorial costs.\u201d<\/p>\n\n\n\n

Over the years, the conditions and percentages of this scheme have been adjusted several times. However, the original goal remained unchanged: to make the Netherlands attractive to international knowledge workers and talent.<\/p>\n\n\n\n

<\/div>\n\n\n\n

How the scheme has evolved over the years<\/h4>\n\n\n\n

The 30% ruling has undergone various reforms. Here are some of the key milestones:<\/p>\n\n\n\n

    \n
  1. 1960s<\/strong>: The foundation for the scheme was laid with a tax exemption for specific costs incurred by expats. No fixed percentage had been established at this point.<\/li>\n\n\n\n
  2. 1990<\/strong>: The scheme was structured, and the fixed percentage of 30% was introduced. This provided more clarity and consistency.<\/li>\n\n\n\n
  3. 2012<\/strong>: Stricter requirements were introduced, including a salary threshold. This meant that only employees earning a minimum salary qualified. The maximum duration of the scheme was reduced from 10 to 8 years.<\/li>\n\n\n\n
  4. 2019<\/strong>: The maximum duration was further shortened from 8 years to 5 years. This was in response to political pressure to reduce the costs of the scheme for the government. Additionally, employees who had applied earlier were compensated through a transitional arrangement.<\/li>\n<\/ol>\n\n\n\n
    <\/div>\n\n\n\n
    \n