For foreign employees temporarily working in the Netherlands, the 30% ruling offers a valuable tax benefit. This scheme allows eligible employees to receive a tax-free allowance of up to 30% of their salary for a maximum of 5 years, provided they meet specific conditions, including a minimum salary threshold.
What are the salary thresholds for 2025?
To qualify for the 30% ruling, employees must meet the following annual salary thresholds:
- Employees under 30 with a master’s degree: €35,468
- Other employees: €46,660
If an employee works in the Netherlands for only part of the year, the threshold is applied pro rata.
How does the tax-free allowance work?
The tax-free allowance can cover up to 30% of the employee’s Dutch taxable salary, reducing the taxable portion significantly. However, it’s important to note that the remaining taxable salary must not fall below the salary threshold. For employees earning less than 100/70 of the threshold, the tax-free allowance will be less than 30%.
What about actual expenses?
The tax-free allowance is designed to cover extraterritorial costs—the additional expenses of working in the Netherlands. These can include:
- Travel costs
- Housing costs
- Living expenses
If the employer reimburses actual extraterritorial costs in addition to the 30% allowance, these payments will be taxable. However, if an employee doesn’t qualify for the 30% ruling, the employer can still reimburse actual extraterritorial costs tax-free, as long as proper receipts are provided.
A cap on tax-free allowances
As of 2025, the tax-free allowance is capped at €73,800 for salaries up to €246,000 annually. This aligns with the Standards for Remuneration Act (WNT), which applies to top salaries.
However, there’s good news for expats who were already receiving the tax-free allowance before January 1, 2023—for them, the cap does not apply in 2025.
Why does this matter?
The 30% ruling can provide significant financial relief for expats working in the Netherlands, helping to offset the higher costs of living and working abroad. Employers also benefit from this scheme, as it helps attract and retain skilled international talent.
If you’re an employer or an employee who may qualify for the 30% ruling, it’s important to understand how the scheme works and ensure compliance with the latest rules.
Need help navigating the 30% ruling or other expat-related tax matters?
At Bol International, we specialize in helping businesses and their employees manage cross-border challenges. Get in touch to learn more about how we can support you.
