Netherlands 30% Ruling Changes 2026: What NRIs Need to Know

The Netherlands 30% Ruling: Status After the 2024–2026 Reforms

The Dutch 30%-regeling has historically been one of Europe's most generous expatriate tax incentives, allowing qualifying employees to receive 30% of their gross salary tax-free as a reimbursement for "extraterritorial costs." For NRIs working in the Netherlands under a skilled migrant permit or EU Blue Card, understanding the current state of this scheme is essential for salary negotiation and tax planning.

What Changed: The 2024 Income Cap Removal and the 2027 Phase-Out

In late 2023, the Dutch government introduced a controversial amendment capping the 30% ruling benefit at the "Balkenende norm" (the public sector salary cap, approximately €233,000 gross in 2024). However, following significant lobbying from multinationals and expat communities, this cap was removed before it took effect — the final legislation passed in early 2024 reversed the cap for all years.

However, the same legislative package introduced a phased reduction starting 2027:

2024–2026: 30% tax-free, no income cap.
2027: Rate drops to 27%.
2028: Rate drops to 22.5%.
2029 onwards: Scheme becomes a flat EUR 2,800/year maximum reimbursement — effectively ending meaningful benefit for most high earners.

If you are currently benefiting from the 30% ruling or plan to apply in 2026, you can still enjoy the full 30% for the remainder of your current ruling period (max 5 years from the ruling start date), subject to the phased reduction schedule.

Eligibility for NRIs in 2026

To qualify for the 30% ruling, you must meet all of the following:

Recruited from abroad: You must have been living more than 150 km from the Dutch border for at least 16 of the 24 months before your first working day in the Netherlands.
Salary threshold: Minimum gross taxable salary of €46,107/year (2026 figure; indexed annually). Reduced threshold of €35,048 applies for employees who completed a Dutch master's degree within the past year and are under 30.
Specific expertise: Your skills must be scarce in the Dutch labor market — in practice, most STEM, finance, and technology roles qualify automatically at the salary threshold.
Employment contract: Must be with a Dutch employer registered with the Belastingdienst (Dutch Tax Authority).

Interaction with Indian DTAA (Indo-Dutch Tax Treaty)

India and the Netherlands have a DTAA (Double Taxation Avoidance Agreement) in force. Key points for NRIs:

The 30% tax-free portion under the ruling is not considered income in the Netherlands for treaty purposes — it is a cost reimbursement. This means the full 30% is effectively exempt from both Dutch tax and Indian tax.
The remaining 70% of your salary is taxable in the Netherlands at regular Dutch income tax rates (up to 49.5% in Box 1). Under the DTAA Article on employment income, this Dutch-taxed portion is typically exempt from Indian tax — you claim a foreign tax credit using Form 67 in your Indian ITR-2.
Dutch dividends (Box 2) and investment income (Box 3) have separate treaty provisions — consult a tax advisor for these.

How to Apply: The Loonheffingskorting Form

Your Dutch employer initiates the application by submitting a request to the Belastingdienst within 4 months of your start date (late applications result in the start date being moved forward to the application date). The process:

Employer files Form "Verzoek loonheffingskorting" along with your CV, degree certificates, and employment contract.
Belastingdienst issues a "beschikking" (ruling decision) — typically within 10–16 weeks.
Once approved, your employer reflects the benefit as a tax-free reimbursement on your pay slips.
You file a Dutch tax return (M-form for the first/last year, P-form for full years) claiming the ruling benefit.

You do not need to do anything separately in India beyond including the details in Schedule FSI and Schedule FA of your ITR-2 for Indian tax compliance.

Use the Tax & DTAA Calculator on NRI Tools to model your effective tax burden under the Indo-Dutch treaty and compare scenarios with and without the 30% ruling.