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Netherlands: “30% ruling” shortened to five years, effective 2019

Netherlands: “30% ruling” shortened to five years

The “30% ruling” is a form of tax relief for employees coming to the Netherlands who are recruited from abroad and who possess specific expertise that is not present or is scarce in the Dutch labor market. Under this tax relief, employers can remunerate roughly 30% of the salary untaxed.


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The Dutch government announced on 20 April 2018 that the 2019 Tax Plan will include a measure shortening the period for which the 30% ruling is granted from eight years to five years as of 1 January 2019. This change would also apply to employees currently using the 30% ruling, for whom the duration will also be shortened to five years as of 1 January 2019.

KPMG observation

With the government’s announcement, it will be necessary to re-determine the remaining term of the 30% ruling as of 1 January 2019, for all employees currently using it.

“Partial foreign taxpayer” consideration

Under the 30% ruling, it is possible to opt for “partial foreign taxpayer” status. This means that for purposes of taxation in Box 2 and Box 3, the employee is regarded as a foreign taxpayer and is only subject to tax in Box 2 on income from a substantial interest in a Dutch company and in Box 3 on income from property situated in the Netherlands. Due to the shortened duration of the 30% ruling, the period during which the option for partial foreign taxpayer status can be taken would also be shortened from eight years to five years. 


Read an April 2018 report prepared by the KPMG member firm in the Netherlands

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