The concession contains the rule that qualifying employees may receive 30% of their wages as a tax free allowance, to cover additional expenses incurred, because of their move to The Netherlands. So, effectively only 70% of the wages are taxed in The Netherlands.
As part of the budget proposal for 2012, the Ministry of Finance announced 3 restrictions and 1 expansion of the 30% ruling as from 2012:
Re 1. Employees living within 150 kilometers from the Dutch border will no longer qualify for the 30% ruling. This is in particular of importance for employees from Belgium and the border region of Germany.
Re 2. The 30% ruling is granted for a period of 10 years. In the current ruling, this 10 year period will be reduced by earlier employment or stay in The Netherlands within a period of 10 years before the start of the current Dutch employment. Under the new 30% ruling this reference period is extended to 25 years. This change in the regulation is mainly important for Dutch citizens who have lived and worked abroad for more than 10 years. Under the current regulation, they can apply for the 30% ruling when they return to The Netherlands. For the new 30% ruling, they will have to be living outside The Netherlands for more than 25 years.
Re 3. Under the current 30% regulation, the employee has to possess specific expertise, which is scares in The Netherlands in order to qualify for the 30% ruling. Under the new ruling conditions, a salary norm is introduced: if the employee’s annual gross salary exceeds € 72,313 (70% van € 70,313 is € 50,619), he will in essence qualify for the 30% ruling, or better, if the salary is below € 72,313 the employee will not qualify.
Under the new ruling, foreign students, who write their thesis in The Netherlands and graduate (PhD) at a Dutch university and who are subsequently employed in the Netherlands, will qualify for the 30% ruling if they meet a specific, reduced salary norm.