Adjustments 30% ruling

After the recent tightening of the 30% ruling such as limiting the duration and the announced capping of the amount over which the 30% ruling can be applied, 3 amendments were adopted by the House of representatives on October 26, 2023 that would further tighten the 30% ruling as of January 1, 2024. If the Senate agrees to this further tightening of the 30% ruling, it will result in an administrative burden increase for employers. 

Last year it was determined that as of 2024 the amount over which the 30% rule may be applied will be capped at the norm of the Wet Normering Topinkomens (WNT norm). This standard is currently € 223,000 per year. The following austerity measures may be added as a result of the adopted amendments:

  • The untaxed refundable portion of taxable wages (capped at the WNT standard) is capped at the following percentages: 
  • First 20 months: 30%
  • Second 20 months: 20%
  • Third 20 months: 10%
  • Elimination of notional foreign tax liability for Box 2 and Box 3 


There is a transitional arrangement for employees who were already using the 30% ruling over the last pay period of 2023. For these employees, the previous austerity measures, the choice per calendar year and the capping at the WNT norm will continue to exist, but the reduction of the 30% ruling percentage will not apply.

The possibility to opt for the fictitious foreign tax liability for this group will end on December 31, 2026. Furthermore, as of 2027, there will no longer be a possibility to be considered a notional foreign taxpayer. 

Cutback consequences

The employer must now start monitoring throughout the five-year period when the percentage of the 30% rule changes. This may also affect the choice to reimburse the actual extraterritorial expenses and not assume the applicable percentage. Extraterritorial costs are, for example: 

  • The additional cost of living due to a higher price level in the Netherlands than in the country of origin; 
  • The cost of storing furniture in the country of origin; 
  • Dual housing costs such as a hotel because the employee has continued to live in the country of origin; 
  • Travel expenses to the country of origin for such purposes as family visits or family reunification; 
  • Course costs for the employee and family members to learn the Dutch language; 
  • If the employee must file an income tax return in the country of origin and in the Netherlands, the cost of the Dutch tax return. 

The decision to abolish the notional foreign tax liability as of December 31 2026, means that the option to opt for the notional foreign tax liability will not be honored for all employees, who currently make use of the 30% ruling, for the entire term. Also, the cost of preparing an income tax return is expected to increase.

It can therefore be concluded that there is a considerable increase in the administrative burden, as the transitional arrangement regarding the notional foreign tax liability does not respect the entire period of the 30% ruling. The choice to reimburse the actual extraterritorial expenses may possibly become more attractive than using the percentage of the fiscal wage, especially when the 30% ruling has been in effect for some time. 

Blue Umbrella is here to provide tax advice. Contact us here.