Expats & International Employment
SØRENSEN LAWYERS advises multinational employers on structuring Dutch relocation packages, reviewing assignment contracts for continuity risk, and communicating compensation changes to affected staff in a way that holds up on both the legal and the practical side.
The Expat Regime: 30% to 27%, What Changes for Employers
For years, the 30% ruling has been one of the most reliable tools international employers use to bring talent into the Netherlands: a flat, tax-free allowance meant to offset the extra cost of relocating. That tool is about to get smaller. As of January 1, 2027, the maximum tax-free allowance under the ruling drops from 30% to 27% of an employee’s salary, for the entire 60-month term. If your organization relocates staff to the Netherlands, or currently sponsors employees under the ruling, this affects how you budget, negotiate, and communicate with them.
What Is Actually Changing
Under current rules, employers can pay up to 30% of an eligible employee’s salary as a tax-free allowance, covering the extraordinary costs of working abroad. From 2027, that ceiling falls to 27%, applied across the full duration of the ruling rather than stepping down gradually. This replaces an earlier, more complicated proposal that would have tapered the allowance down over time. The government has opted instead for one flat, lower rate.
For a mid-to-senior hire, that three-percentage-point reduction is not trivial. On a salary of €120,000, it is the difference between roughly €36,000 and €32,400 in tax-free allowance per year, a gap employees will notice and one that employers should be ready to explain.
Who Is Protected, and Who Isn’t
The transition rules matter as much as the headline number.
Employees who started using the ruling before 2024 are shielded from both this change and the earlier tightening of the salary threshold, for the remainder of their term. Their position does not change unless the ruling itself is interrupted, for example by a gap in employment that breaks continuity.
Employees who started using the ruling from 2024 onward keep the salary threshold that applied when they started, but the drop to 27% will still apply to them from 2027, regardless of when their five-year term began.
New arrivals from 2027 onward will be subject to the 27% cap and the higher salary thresholds from day one.
The Salary Thresholds Are Rising as Well
Alongside the percentage cut, the minimum salary an employee must earn to qualify for the ruling is going up. On 2024 reference figures, which are adjusted annually for inflation, the general threshold rises from €46,107 to €50,436, and the reduced threshold for employees under 30 with a relevant master’s degree rises from €35,048 to €38,338. By the time these figures take effect, indexation will have pushed the actual numbers higher still, so treat these as a floor rather than a final figure.
What This Means in Practice
A few steps are worth taking now, well ahead of January 2027.
- Review net-pay guarantees in existing offer letters and assignment contracts. If you have promised employees a specific take-home amount, a lower allowance ceiling may require a gross-up adjustment on your side, not theirs.
- Re-model relocation cost projections for any hires planned for 2026 and 2027. Budget owners will want to know the real cost difference before offers go out, not after.
- Check continuity carefully before restructuring an expat’s role or contract. A break in the underlying employment relationship can end the transitional protection unexpectedly.
- Start the conversation with affected employees early. A change to net income is personal, and employees who hear about it from payroll rather than from HR tend to escalate faster.
The 30% ruling transition at a glance
| When you started using the ruling | Allowance cap from 2027 | Salary threshold |
| Before 2024 | Unaffected for the rest of the term | Unaffected for the rest of the term |
| From 2024 through 2026 | 27% applies from 2027 | Threshold at start date is retained |
| From 2027 onward | 27% from the start | New, higher threshold applies |
Quick answers
Does this affect expats already using the ruling?
Only those who started from 2024 onward. Anyone who started before 2024 keeps their current terms for the rest of their term.
Is the reduction phased in gradually?
No. It is a single flat cap of 27%, replacing the earlier proposal for a stepped decrease.
Does the salary threshold change apply retroactively?
No. Employees who already qualify keep the threshold that applied when they started.
When to involve legal counsel
Before you restructure an assignment or extend a fixed-term contract for an expat employee: this is exactly the moment continuity can be broken inadvertently, turning a routine HR decision into an unplanned tax cost.
Before negotiating a new offer that references the 30% ruling by name: confirm which cohort the employee falls into and what allowance percentage actually applies.
Before communicating the change to affected employees: align the message with payroll so the numbers employees hear match what will actually appear in their contract.
SØRENSEN LAWYERS advises multinational employers on structuring Dutch relocation packages, reviewing assignment contracts for continuity risk, and communicating compensation changes to affected staff in a way that holds up on both the legal and the practical side.
If you are planning relocations for 2026 or 2027, contact us before the offer goes out.