The 30% ruling has been further reduced. The consequences will only be noticeable from September 2025. As an employer, how do you deal with this change?

The 30% ruling applies to employees who are recruited from outside the Netherlands to work temporarily in the Netherlands. Expat employees who meet certain conditions do not have to pay tax on a maximum of 30% of their salary for five years. Until 2024, the tax-free compensation was set at 30% of the salary. As part of the 2024 Tax Plan, from 2024 the amount of the tax-free allowance will be reduced from 30% for the first 20 months, to 20% for the next 20 months and then to 10% for the remaining months. This phase-out scheme results in a lower employee’s net income.

A transitional arrangement applies to employees who already received a 30% compensation before January 2024. The phase-out scheme does not apply to these employees. It is important to point out to employees who do fall under the new scheme that the tax-free allowance is being phased out and that, as a result, their net income will be lower during the term of the 30% scheme.

In a motion from the Senate kst-36418-Z the government was requested to bring forward the planned evaluation of the 30% ruling and, based on this evaluation, to come up with an alternative proposal in the 2025 Tax Plan that is less harmful for the economy. The current phase-out scheme can therefore be reversed (in whole or in part) through a legislative amendment effective 1 January 2025. We will keep you posted.