30% ruling to be replaced by 27% ruling from 1 January 2027

Foreign employees may be eligible for the 30% facility under certain conditions. If this facility is granted, the employer may pay out part of the salary as a tax-free compensation for extraterritorial costs. The employer can instead choose to reimburse the actual extraterritorial costs. Until 2024, the tax-free compensation was set at 30% of the salary.

The duration of the 30% ruling is a maximum of 5 years. Through an amendment to the law, it was determined that from 2024 the amount of the tax-free compensation would 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 phasing out scheme will not be implemented. Instead, it was announced on Budget Day 2024 that from 1 January 2027, the 30% ruling will be replaced by a 27% ruling, for arrangements entered into on or after 1 January 2024. For arrangements entered into on or after 1 January 2024, 30% may then be applied in 2025 and 2026, and insofar those arrangements continue after 1 January 2027, a maximum of 27% of the salary may be tax-free for the remaining duration. For arrangements that started before 1 January 2024, the tax-free compensation will remain at 30%. Replacing the 30% ruling with a 27% ruling will be regulated through an amendment to the 2025 Tax Plan.

Want to know more? Feel free to contact Cara Pronk