30% ruling changes update
Initially, it was planned that, starting from January 1, 2024, the current 30% ruling would be replaced by a tiered 30-20-10% system. However, this proposal will now be reversed through an amendment to the 2025 Tax Plan, even before its implementation.
New 27% Ruling and Salary Norm Increase
From January 1, 2027, the maximum percentage of an employee’s salary that can be paid tax-free under the new ruling will be reduced to 27% for the total duration of 60 months. Alongside this reduction, the salary thresholds will be adjusted. The salary norm for employees will increase from €46,107 to €50,436 (based on 2024 figures and subject to annual indexation). For employees under the age of 30 who hold a master’s degree, the salary threshold will rise from €35,048 to €38,338 (also based on 2024 figures and subject to annual indexation).
Employees who are already benefiting from the 30% ruling as of December 2023 will continue to do so under the current rules for the entire five-year period. They will not be affected by the increased salary norms. However, transitional rules will not apply if the 30% ruling is terminated and reinstated after January 1, 2024.
Abolition of Partial Foreign Taxpayer Status
Currently, employees residing in the Netherlands and benefiting from the 30% ruling can choose to be classified as “partial non-resident”.
This classification exempts them from being taxed on Box 2 income (income from substantial interest in a non-Dutch entity) and Box 3 income (income from savings and investments). This option will be abolished as of January 1, 2025. Employees who were already under the 30% ruling by the end of 2023 will still benefit from the partial non-resident status until the 2026 income tax return (to be filed in early 2027).
Cap on the 30% Ruling
Effective January 1, 2024, the 30% ruling no longer applies to salaries exceeding the public sector pay cap, which is set at €233,000 for 2024. For employees who were already benefiting from the 30% ruling as of December 2022, this pay cap will take effect from January 1, 2026.
Choice Between 30% Ruling and Reimbursement of Actual Expenses
As of January 1, 2023, employers have the option each year to either apply the 30% ruling or reimburse actual extraterritorial expenses incurred by the employee on a claim basis. This flexibility allows employers to choose the most beneficial arrangement for their employees based on individual circumstances.
If you have any questions about this update, please reach out to us.
