Every year, on the third Tuesday of September, the Dutch government officially presents its tax and financial plans for the following year. On September 17, 2024, the cabinet unveiled the 2025 Tax Plan. The most significant news for expats is that some of the restrictive measures announced last year will be reversed.

As you may recall from last year, the government introduced a series of changes that created uncertainty for expats, including the removal of partial residency status from 2027 and plans to gradually reduce the 30% ruling to 10% in three phases over five years.

Following significant pushback from businesses dependent on highly skilled migrants and the release of an evaluation report on the 30% ruling in mid-2024, the cabinet decided to reverse some of these changes. These updates, which were leaked to the media earlier this month, have now been officially confirmed in the accompanying letter to the 2025 Tax Plan (Belastingplan 2025).

A change of plans

Initially, the 30% ruling was set to decrease incrementally: 30% for the first 20 months, 20% for the next 20 months, and 10% for the final 20 months of its term. However, this idea has now been scrapped. The evaluation found that the 30% ruling remains effective and that cutting its benefits could negatively impact the Netherlands’ attractiveness to foreign specialists. Expats who started using the 30% ruling before 2024 will now be able to continue under the original terms until the end of their eligibility period.

What’s changing?

• From 2027, expats will be able to receive only 27% of their salary tax-free instead of 30%. The 30% ruling will effectively become the “27% ruling.”
• For those granted the ruling between 2024 and 2026, the rate will remain at 30% but will also drop to 27% in 2027.
• The maximum taxable salary eligible for the ruling will remain unchanged, adjusted for inflation in 2025. In 2024, the maximum taxable salary was €223,000.

Increased minimum salaries

The minimum taxable salary required to qualify for the ruling will increase:

• From €46,107 to €50,436 for most employees.
• From €35,048 to €38,338 for employees under 30 with a master’s degree.

These amounts will be indexed annually based on inflation.

What’s not changing?

The quiet removal of partial tax residency status appears to remain in effect. This means that expats who obtained the 30% ruling (and with it, partial tax residency status) in 2024 or later will be required to declare all their worldwide assets (box 3) and foreign dividends (box 2) starting January 1, 2025.

Where is the full text of the bill?

The initial release only included an accompanying letter to the plans, summarizing the proposed changes. Due to time constraints, some parts were finalized shortly before the presentation. Several supplements to the plan are expected, with the changes outlined above included in the second supplement (2de nota). The complete text of the amendments was presented to Parliament (with a one-week delay) on October 28, 2024.

You can read the full text of the amendments and explanations here.

Final thoughts

The reversal of proposed restrictions on the 30% ruling is a welcome development for expats and businesses alike. These changes reflect a recognition of the critical role that highly skilled migrants play in the Dutch economy. However, it’s essential to stay informed as adjustments such as the rate reduction to 27% and the ongoing changes to partial tax residency will still affect expats in the coming years. Keeping track of updates through reliable sources and seeking professional advice when needed will ensure you remain compliant and make the most of the available tax benefits.