Important changes regarding the 30% ruling
If you are a highly skilled migrant in the Netherlands recruited from abroad, you might qualify for the 30% ruling. This ruling has been subject to changes in 2024 and 2025. What impact will this have on you? Keep reading to find out.
What is the 30% Ruling?
The 30% Ruling, also referred to as the 30% facility, is a tax benefit provided to highly skilled migrants relocating to the Netherlands for a specific job position. Eligible individuals under the 30% Ruling are exempt from paying taxes up to 30% of their gross salary in the Netherlands. This arrangement allows employers, under certain conditions, to allocate up to 30% of the employee’s salary as a tax-free allowance for a period of 60 months (or five years). The purpose of this reimbursement is to offset the additional expenses that international employees may face when moving to a new country for work. Both the employee and the employer must agree in writing for the ruling to be applicable.
Change of the 30% Rule
As of January 1, 2024, a simplification occurred whereby the regulation allowed for a maximum of 30% of taxable income to be applied during the first 20 months, 20% during the second 20 months, and finally, 10% during the third 20 months. This simplification has been reversed. Therefore, for the years 2025 and 2026, the percentage will remain at 30%.
Starting January 1, 2027, the 30% scheme will be replaced by a 27% scheme. Additionally, the taxable salary that must remain after applying the scheme will be increased. Based on the 2024 amounts, the salary standard will rise from €46,107 to €50,436. The salary standard for incoming employees under 30 years old with a master’s degree will increase from €35,048 to €38,338.
Transitional Rights
If the 30% scheme has already been applied before 2024, transitional rights will apply throughout its duration. The 30% rate and the old (lower) salary standards will remain in effect.
30% Ruling Applicable for the First Time in 2024
For this group, the 30% rate applies for the years 2024, 2025, and 2026, and will be reduced to 27% starting January 1, 2027. The current lower, yet to be indexed, salary standard will also apply starting in 2027 when the lower percentage is in effect.
30% Ruling Applicable from 2025
For this group, the 30% rate will also apply for the years 2025 and 2026, and 27% from 2027 onwards. For the years prior to 2027, the current lower, yet to be indexed, salary standard will apply, but from 2027, these employees will be subject to the new higher salary standard.
Garden leave
Garden leave affects the entitlement to the 30% ruling. The applicability of this ruling stops one pay period after the last pay period in which work in fact has been performed. So if you are exempted from work, the tax benefit ceases to apply. A transfer of the ruling to a new employer could be at risk as well. Therefore, signing a settlement agreement that includes a period of exemption from work can be detrimental. We can provide guidance on this matter.
Visa
If employees with a visa for highly skilled migrants become unemployed, they have up to 3 months to find a new job that meets the criteria. This period is intended for securing a new position with another recognized sponsor and cannot exceed the duration of your highly skilled migrant permit. If your residence permit expires sooner, you have less than the 3 months’ time. The period for finding a job starts on the day on which your contract was terminated.
If you can’t find new employment that meets the visa requirements before that date, the IND may revoke your residence permit. In this regard, the termination date of the employment contract arising from a settlement agreement is crucial. GMW lawyers in The Hague can provide guidance on this issue.
Any questions?
The 30% tax-free benefit will be reduced in 2024, but the eligibility for reimbursement of extra-territorial costs continues to be important for employees relocating to the Netherlands. For further advice and information on how this adjustment will affect you, please contact us.
