Changes to the 30% ruling

Changes to the 30% ruling
In the Dutch 2012 tax plan, the previously announced changes to the 30% ruling have been further elaborated upon. In the following article we in depth explain this ruling and the proposed changes therein. For an efficient summary of the requirements for the 30% ruling, please be referred to the following article on our website UPDATE December 20th, 2011: The changes to the 30%-ruling have now been approved by both the Dutch parliament as well as the Dutch upper house. The recent amendments to the changes in the 30% ruling constitute that the salary requirement will be loosened in comparison to the initial plans, in brief the required base salary excl 30% ruling will be lowered to a minimum of EUR 35,000 (EUR 50,000 incl 30% ruling). There are two further salary lowerings to this main requirement. However these softenings are to be financed by reducing the applicable maximum term of the ruling from 10 years to 8 years. This reduction of the term will only apply to new cases as of January 1st, 2012. Read more by clicking on the article title… Some time ago the municipality of Amsterdam has warned for a braindrain of young professionals. Earlier on the Dutch association of tax advisers has given detailed comments on the announced changes, please find a summary of these updates below. Please contact for any questions you may have on this subject.

30% ruling
In the Netherlands a very interesting tax benefit is offered for specialist staff recruited from abroad. This tax benefit is known as the 30% ruling. This ruling can be granted after a request thereto at the tax authorities and is applied by the employer on the salary of the foreign specialists through the withheld wage tax. In order for the foreign specialist to qualify for this ruling, he/she has to meet certain specific (quality) requirements. In case the ruling is granted it will be applicable for a maximum period of ten years. In practical terms the ruling encompasses that 30% of the earnings from current employment (including one-time bonuses, etc.) is left tax exempt. In best case at least 30% of the income from current employment falls in the highest tax bracket which than leads to a tax benefit of 52% over that part of the income. Additionally, the system has other benefits; employers’ contributions to international schools for expat’s children remain tax exempt and driving licenses can easily be converted. An important additional tax benefit is that the tax liability, at the request of the employee, in the so called box 2 and box 3 is significantly reduced. The scheme has not remained undisputed during its existence, both in jurisprudence and in parliament. Partly in response to a news item in the media earlier this year, the Finance Secretary of State decided to make some changes in the current system.

The five changes in the 30% ruling effective as of the year 2012

• Before 2012, application of the ruling was within reach of qualifying Dutch nationals if they had been abroad for more than ten years and did not returned during these ten years. This ten year term is now significantly extended to 25 years. This change will therefore reduce the number of Dutch people eligible for the 30% ruling considerably;
• Henceforth, mostly due to ‘competition fraud’ identified by the State, persons residing within a radius of 150 kilometer (‘as the crow flies’) from the Dutch border are no longer eligible for the ruling. Please note this 150 kilometer area is calculated directly from the Dutch land borders, so not including the territorial/economic Sea area. This website offers a simple calculation tool:;
• A standard salary is introduced which is linked to the salary requirement of the so-called skilled migrants permit. Only if this (taxable) salary standard is met, the employee is deemed to have the required specific expertise. There is an exemption for PHD’s, they will not have a minimum salary criterion. The scarcity of the expertise at hand must however still be demonstrated;
• Foreign PhD students, aged up to thirty years, studying in the Netherlands may be eligible for the ruling. This despite the fact that, after their doctoral studies, they have been recruited in the Netherlands.
• The maximum applicable term of the ruling has been decreased from 10 years to 8 years.

30% rulings granted before January 1st, 2012, will be respected in principle, but the decrees may be reviewed by the tax inspector after the first five years the ruling was first granted. There will then be a possible examination on whether the salary standards have been met and whether the employee lived in the above described Dutch border area before commencing his employment. As a result rulings granted before January 1st, 2012, may be revoked by the tax authorities. The extended term to 25 years will in principle not affect decrees issued before January 1st, 2012.

Notice 1
Under certain conditions qualifying employees who have been working for a Dutch employer for some time, without applying for the 30% ruling, may still be eligible for obtaining the ruling. Please contact us for a, free of charge, quick scan. Again, given the above mentioned developments time could be of the essence to file a request for the 30% ruling! So please do not hesitate to contact us.

Notice 2
The 30% ruling may, after a new request to this effect, be continued with another employer. However between the end of employment at the previous employer and the commencement date of employment with the new employer, in principle a period of no more than three months may have elapsed. In case at the end of the employment relationship no insight is available into a new employer, it would be advisable to take this into account when determining the end date of employment.

Notice 3
In case you loose your entitlement to the ruling after the five year check or because of a change in employer, there is still a possibility to receive a tax free reimbursement for extraterritorial costs. Please contact us for a further explanation and a list of the qualifying extraterritorial costs.

Notice 4
Please check our frequently asked questions page which contains lots of questions the 30%-ruling raises with actual expats and our subsequent replies to them:

Update March 28th, 2012:
Currently the European Commission, after questions raised by Belgian politician Frieda Brepoels, is (quote:) “assessing the compatibility of the new provisions with EC law and are continuing their contacts with the Dutch authorities on this issue. After assessing the additional information from the Dutch authorities, the Commission will decide whether any follow-up measures will be taken.” The questions as raised by Frieda Brepoels, under number E-000979/2012:

“For a number of specific jobs, the Netherlands actively recruits highly-trained workers living abroad (including in Flanders). One important instrument used in attracting such frontier workers is the 30 % rule for workers resident outside the country: this tax benefit consists of granting the workers in question a tax-free allowance of 30 % on their gross pay for 10 years. In my Question E‑009620/2011, I already raised the issue of changes introduced in the Netherlands to the 30 % rule for frontier workers. The Commission then replied: ‘The Commission is aware of Dutch intentions to exclude certain migrant workers from the scheme. As a concrete proposal has not yet been adopted, the Commission considers it as premature to comment whether the reform would be in line with EC law’.

In the meantime, it was indeed decided at the end of December 2011 that this 30 % rule would no longer be applied to frontier workers who live within 150 km of the Dutch border.

In addition, this rule was abolished retroactively: this means in effect that all workers who enjoyed entitlement to this 30 % rule over the past five years would no longer be entitled to it in future. In its opinion of 14 December in Case W06.11.0500/III, however, the Council of State of the Netherlands raised objections to the 150 km criterion. ‘The Department is not convinced, however, that the criterion of 150 km is appropriate and proportional.’

Now that the decision has been made, I would like to put the following questions once more to the Commission:
1. What is the Commission’s view on restricting the rule’s territorial application to 150 km from the border? Does this restriction, which discriminates on the basis of place of residence and excludes residents of Belgium and parts of Germany from the 30 % rule, not conflict with EC law?
2. What is the Commission’s view on the abolition of the 30 % rule with retroactive effect in the light of the principle of the protection of legitimate expectations?
3. What is the Commission’s view of the transitional measures, in particular for workers who have been entitled to the 30 % system for almost five years? Are these measures adequate?
4. Do not workers who are entitled to the 30 % rule in combination with a reduction in gross pay regain automatically, upon the abolition of the 30 %, the right to the same gross pay as their Dutch colleagues (Article 7 of Regulation 492/2011)?”

Update December 20th, 2011:
The changes to the 30%-ruling have now been approved by both the Dutch parliament as well as the Dutch upper house. This will mean the new legislation, as discussed in the earlier updates, will turn into force as of January 1st, 2012. As there are some uncertainties still left, the expectation is that the State secretary will publish a further explanation of the new legislation within the coming time. Also I expect some case law to develop in the months to follow.

Update December 13th, 2011
Dutch upper house is soon to decide whether it can agree with the changes to the ruling which have already been approved by Parliament. The upper house has raised several questions; amongst others these questions regard whether the 150 kilometer criterion is in breach with the EU incorporation treaty and whether this criterion will not interfere getting employees with specific knowledge from border area’s into the Netherlands. A reply from the state secretary is expected soonest. My personal view is that this 150 kilometer criterion should not be introduced. The arguments for this criterion as given by the state secretary do not justify its overkill, its possible breach of EU law and factual discrimination of Border residents; especially Belgian residents will not qualify any more. As we understood a Belgian politician has already raised questions on this criterion at the EU Law commission.

Meanwhile, Okx van Leeuwen has sent a message about the 150 km criterion addressed to Mr. Van Boxtel (D66) and Mr. Essers (CDA), please find enclosed an English translation of this message to these Upper House members:

Dear Mr. Van Boxtel,

With regard to the forthcoming changes to the 30% ruling, I would like to, perhaps unnecessarily, point out that regarding the implementation of the 150 km criterion, in the latest answers to the Senate by the State Secretary of Finance, there is a contradictory argument.

In relation to Expatriates residing within the 150 km border, he said briefly that these Expats will have much lower costs than Expats coming from outside this boundary. However, during the discussion regarding maximizing the 30% ruling supposedly the cat’s out of the bag. It turned that the ruling is there to stimulate the favorable business climate in the Netherlands, because the top rate of income tax in the Netherlands is relatively on the high side in comparison to other countries. In my view these are different and conflicting principles. If the ruling is effectively there in order to stimulate the business climate, the principles when setting up a 150 km border are to me unjustifiable and constitute therefore an indirect form of discrimination.

I have sent Mr. Essers, Senator CDA, the above comments as well.

Jan-Hein van Leeuwen
Okx van Leeuwen Tax Lawyers in Business

Update November 18th, 2011
The amendments to the proposed changes in the 30% ruling – as mentioned in my update of November 14th – have now been accepted by Dutch parliament. An added change is that the applicable maximum term of the ruling will be reduced from 10 years to 8 years for new applicants as of 2012. The new legislation has to still be approved by the Dutch Upper House. When approved these new rules will become effective as of January 1st, 2012. Please also be referred to the official website of the government:

Update November 14th, 2011
According to the latest publication of the Ministry of Finance, thinkable can be the introduction of three qualifying salary groups as per 2012: 1. Scientists will not have a salary minimum. 2. People below 30 years of age with a Masters education have a minimum salary requirement of EUR 26,605 excl 30% and EUR 38,007 incl 30%. 3. A general reduction, for the other groups of expats mentioned under 1 and 2, of the minimum salary requirement till EUR 35,000 excl 30% and EUR 50,000 incl 30%. Please note that these minimum amounts are subject to annual indexation. As stated above the minimum base salary could be lowered if a budget solution is found within the ruling. For more precise information, please contact us.

Update November 9th, 2011
As stated above the state secretary is considering to change the proposal regarding the salary requirement for scientists. However all other proposed changes will remain unchanged. The 150 km criterion was discussed as well. The state secretary is against another way of measuring this 150 km, e.g. from the residence of the employer to the original residence of the expat at the time of recruitment. The reason why he is not willing to alter this part of the proposal is because it will make the changes more complex. Furthermore he states that residents within a 150 km radius from the Dutch border are deemed to have limited additional costs when living in the Netherlands. The state secretary has now also published the legislation in which the proposed changes to the ruling is taken up. Upon your request I can send you a copy of this legislation by email. Please note it is published in the Dutch language.

Update October 13th, 2011:
The Dutch Financial Times writes that the city of Amsterdam has sent an urgent letter to the Ministry of Finance in order to express its concerns about the limitation of the 30% ruling. Amsterdam fears that young professionals will not meet the income test and look for jobs elsewhere outside the Netherlands. These concerns are shared by the cities of Rotterdam and The Hague. The Ministry in response says it is open for these concerns. According to the Ministry the proposed changes are not designed to damage the competitiveness of the Netherlands. It is however the intention to exclude pseudo-expats. The tax plan for the year 2012 will soon be discussed in Parliament, a possible adaptation of the changes will then be presented.

Update October 7th, 2011: The Dutch Association of Tax Advisers (aka ‘NOB’) has given extensive comments on the suggested amendments to the 30% ruling. Here is a summary of these comments:

* Is there no obvious age discrimination in the inclusion of an age limit on post graduates (aged up to 30 years)? The NOB is against this differentation in age;
* Is the standard taxable salary criterion (EUR 50,619) including or excluding other exempt income (other than the 30% rule)?;
* The NOB suggests to take up a general test of specific expertise in case the wage standard is not met by the expat;
* Can the standard salary criterion be interpreted as being applicable for a full-time employment, and that for a part-time job, or in the case of a salary split, the standard salary may be reduced proportionately. The NOB requests a positive response;
* Should in case of a net wage salary arrangement the net salary be grossed with or without applying the 30% rule? In the current situation the net salary may be grossed without applying the 30% rule;
* The NOB requests regarding the 150 kilometer limit criterion to be understood that with the ‘Netherlands’ is meant the country located in Europe. That is, not the BES islands;
* The NOB considers the 150 kilometer criterion as being arbitrary, but when this limit remains to be included the NOB requests to take into account the distance between the original home address of the expat and the address of the employer;
* The NOB requests a transitional arrangement for all decrees issued before January 1, 2012, throughout their applicable term. Meaning these decrees do not have to comply, at the interim test after the first five years, with the new rules as of 2012;
* The NOB asks for a clarification of the relationship between qualifying for the 30% rule and the option of applying for non-resident taxpayer status;
* The NOB asks for the continuation of the current job rotation qualifying system as of 2012.

The state secretary of Finance will most likely respond to these comments in the coming weeks.

For further noncommittal information regarding the 30% ruling and the proposed changes, please contact Jan-Hein van Leeuwen (Mobile 06.46605520 /

4 thoughts on “Changes to the 30% ruling”

    1. Hi Alfonso,

      Thanks for your interest in my weblog. The October 17th update will be published soonest.

      Kind regards,
      Jan-Hein van Leeuwen

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