Cap on salary for 30% ruling
The proposed budget for 2023 includes a salary limit to the 30% ruling starting 2024. The tax free allowance of 30% will be calculated on the salary only to the extent that it does not exceed the maximum pay for government employees as defined in the Standards for Remuneration Act (Wet normering topinkomens – WNT). For 2023, the maximum is € 223,000. This amount is adjusted for inflation yearly. When an employee does not qualify for the 30% ruling during the entire calendar year, the salary limit will be lowered proportionately.

Transitional law has been proposed for employees who already make use of the 30% ruling during the last wage period of 2022. For them the current rules, with no salary limit, will apply until 1 January 2026.

Any employees who will first use the 30% ruling on 1 January 2023 or later will be affected by the new regulations starting 1 January 2024.

Choice between using the 30% ruling and compensating the actual extraterritorial costs
It is not obligatory to use the 30% ruling to compensate employees for extraterritorial costs, even when the ruling is granted. Employers are also allowed to reimburse the actual costs instead, but these must be substantiated. In that case, no salary limit applies. It is not possible to reimburse the actual extraterritorial expenses tax free while also using the 30% ruling, so the employer has to make a choice.

New in this proposal is a formalisation of the process that must be followed to make the choice between using the 30% ruling or reimbursing actual extraterritorial expenses. Under the new legislation this choice should be made yearly when filing for the first wage period of a calendar year.

Once the choice has been made for either the compensation of the actual expenses or the 30% ruling, this choice will be in effect for the rest of the calendar year, as long as the employee still qualifies for the 30% ruling. When the employee starts working for another employer during the year, the new employer will be able and required to make their own choice.

Because of the time involved in applying for the 30% ruling, an exception has been made for the first four months of employment. The employer is allowed to make the choice in the first wage period after that four month period.