30% ruling, what is new in 2023? 

When your employee starts working in the Netherlands, he/she is likely to be confronted with extra costs due to the move from their home country to the Netherlands. Such costs are called extraterritorial costs. As an employer you may provide your employee with tax-free reimbursement for the actual extraterritorial costs incurred. Alternatively, you may also provide your employee with 30% of their salary as a tax-free allowance by means of submitting a 30% ruling application. This tax-free allowance is considered a compensation for expenses related to international relocation or commuting between the employee’s home country and the Netherlands. This facility is called the 30% ruling. In this article you will find an overview of the main rules with respect to the 30% ruling applicable as of January 1, 2023. 

Salary requirements in 2023

One of the main conditions to be able to apply for the 30% ruling is that the employee at hand has a specific expertise that is scarcely available on the Dutch labor market. The Dutch tax authorities assume that the employee has a specific expertise if the salary threshold (see below) is met. The applicable salary threshold is indexed every calendar year. From January 1, 2023, the indexed salary thresholds, which demonstrate specific expertise for the application of the 30% ruling, have been determined as follows:  

• € 41,954 (in 2022: € 39,467) taxable annual wage (excluding the tax-free allowance of maximum 30%) for employees aged 30 and over; 
• € 31,891 (in 2022: € 30,001) taxable annual wage (excluding the tax-free allowance of maximum 30%) for employees younger than 30 with a Dutch or equivalent foreign master’s degree.  

It should be noted that the above-mentioned salary criteria are applicable to new applications filed as of January 1, 2023, but also to existing cases. They are continuous conditions which should be met. In principle, for every employee who has been granted the 30% ruling which is valid during 2023, the salary criteria as outlined above must be met. 

Transitional arrangement 

A transitional arrangement still applies to employees who have been granted the 30% ruling with a start date before January 1, 2019. In the overview below you will find the restrictions on existing 30% rulings with an effective date before January 1, 2019, and the new end dates in accordance with the transitional law.  

End date on the decision	New end date transitional arrangement
2019 and 2020	End date on the decision
2021, 2022 or 2023	December 31, 2020
2024 or later	End date on the decision minus three years

Partial non-resident taxpayer due to 30% ruling 

An additional tax benefit of the 30% ruling is that the employee can opt for treatment as a partial non-resident taxpayer for a maximum period of five years as long as the 30% ruling is valid. As a result, the taxpayer can choose to be treated as a foreign taxpayer for income from a substantial interest (Box 2) and income from savings and investments (Box 3). Hence, the employee is only subject to tax on income from specific Dutch sources, namely a substantial interest in a Dutch company for Box 2 or Dutch real estate that is not the employee’s residency for Box 3. 

School fees for international schools and the 30% ruling 

In addition to the application of the 30% ruling, an employer may grant a tax-free allowance to the employee for fees for international schools or for an international department of a regular school for children of an expat. For such school fees, the maximum duration for tax-free reimbursement is also set at five years in accordance with the duration of the 30% ruling.  

Driving license 

Normally, in the Netherlands not all foreign driving licenses can be exchanged for a Dutch driving license. However, if your employee has been granted the 30% facility, he/she (and his/her family members) is allowed to exchange the foreign driving license for a Dutch driving license at the local municipality without taking a driver’s test. Please note that merely family members who are registered at the same address as the 30% holder are entitled to the driving license exchange. 

Limitation as of January 1, 2024 

As of January 1, 2024, the 30% ruling will be applicable up to a maximum of the standard of the Act of the Standardization of Top Income (hereinafter “WNT”). The maximum salary for the WNT in 2023 is EUR223,000. Practically this means that in case the employee’s taxable wage is EUR 300,000 the 30% ruling can be applied up to a maximum of the standard wage of EUR 223,000 (threshold in 2023) and over the remainder no 30% ruling can be applied. If the employee’s actual costs are higher than the tax-free reimbursement based on the fixed amount, you can choose for reimbursement of the actual extraterritorial costs (without a maximum). However, the decision to either reimburse the actual costs or to apply the 30% ruling must be made for the full year. You are no longer allowed to change the latter during the year.

If you have any questions regarding the 30% ruling or other Global Mobility related questions, please contact our Global Mobility Services team.