Key Points
- Reduced Tax-Free Wage: Starting in 2027, the tax-free portion of wages for qualifying employees will drop from 30% to 27%.
- Higher Income Threshold: A higher minimum income threshold will be required to use the ruling.
- Affected Groups: Employers hiring highly skilled migrants or posting workers abroad must meet the updated standards.
Overview
On Prinsjesdag 2024, the Dutch government unveiled upcoming changes to the 30% ruling, a tax incentive to attract highly skilled workers abroad. Starting in 2027, the tax-free portion of wages for eligible employees will be reduced from 30% to 27%, signaling a gradual shift in the Netherlands’ approach to attracting and retaining international talent. This adjustment eliminates the proposed phased reduction to a 10% tax-free portion, opting for a stable 27% rate instead.
In addition to the percentage change, the new rules introduce a higher income threshold for eligibility, meaning only employees with salaries above a specified minimum will qualify for the reduced tax exemption. This adjustment will impact employers who hire highly skilled migrants or post workers to the Netherlands from abroad, requiring them to adhere to the new standards. The changes aim to balance the need to attract talent while ensuring a sustainable tax structure for the Netherlands.
The 30% ruling has historically allowed qualifying employees to receive a portion of their gross salary tax-free, offsetting the cost of relocating to and living in the Netherlands. The forthcoming adjustments, however, reflect a tightening of the ruling, prioritizing highly skilled workers at specific income levels. This change will impact new applicants and employees renewing their eligibility under the 30% ruling in 2027 and beyond.
If Parliament approves the changes in 2025, employers and employees will have a transitional period to prepare for the updated requirements. The anticipated adjustment may prompt companies to reassess their compensation packages for international hires to ensure they remain competitive within the new 27% ruling framework.
Looking Ahead
Employers hiring foreign talent in the Netherlands should start evaluating how the upcoming changes to the 30% ruling will affect their recruitment and retention strategies. HR and immigration teams may need to adapt compensation packages for highly skilled migrants, particularly for roles requiring international talent. Employees considering the 30% ruling should also review the new eligibility requirements and plan for potential impacts on their take-home pay starting in 2027. These changes highlight the Dutch government’s strategic approach to maintaining a competitive yet sustainable environment for attracting top talent, and it may influence similar policies in other countries.
