On February 13, 2026, the Supreme Court ruled that the reduction of the maximum duration of the 30% ruling for incoming employees is not contrary to general principles of law or international treaties. Also, employees who had previously received a decision for a longer period cannot invoke the original duration.
Background: shortening 30% ruling
The 30% ruling allows employers to provide tax-free reimbursement of up to 30% of the wages of incoming employees to cover so-called extraterritorial costs. These are additional costs incurred by an incoming employee due to working (temporarily) in the Netherlands.
Until 2019, the maximum duration was eight years (and previously even 10 years). As of January 1, 2019, the legislature reduced the maximum term to five years. For employees who start the scheme from then on, this maximum duration of five years will apply. For employees who already applied the scheme before 2019, transitional law has been introduced. In certain cases, this meant that the application already ended on December 31, 2020, even though the original decision continued for longer.
In the case before us, an employee had a decision for application of the 30% rule until November 30, 2021. However, due to the legislative amendment and transitional law, the application already ended on December 31, 2020. The employee claimed that the reduction violated the principles of due care, legal certainty, proportionality and equality, among others.
The court ruled that the reduction of the duration resulted from a law in the formal sense. The legislature has broad discretion when enacting tax regulations. Therefore, according to the court, the limited transitional law was not unlawful.
Supreme Court's ruling
The Supreme Court upheld this court's ruling. Even if the right to apply the 30% rule would be considered a form of property within the meaning of the European Convention on Human Rights, the legislator may amend the rule.
According to the Supreme Court, the legislature has broad policy discretion in tax legislation. The decision to shorten the maximum duration of the 30% ruling to five years falls within that space.
Moreover, the Supreme Court ruled that the legislator had sufficient reasons to adjust the regulation, for example, from budgetary considerations and the purpose of the regulation. Therefore, it cannot be said that the legislative change is unreasonable or arbitrary.
Nor, according to the Supreme Court, is there any prohibited discrimination or violation of other international treaty provisions.
Consequences for practice
With this ruling, the Supreme Court confirms that the reduction of the duration of the 30% rule to five years is legally valid, also for employees who had previously received a decision with a longer duration.
In practice, this means that taxpayers cannot successfully invoke their original decision to still enforce a longer application of the 30% ruling.
Want more background on the 30% ruling and recent developments? Our colleague Nadine Reer previously published an article in the Remuneration & Tax trade journal, which discusses in more detail how the rule works and the changes in recent years.
If you have any questions in response to this news, please contact us via your relationship manager, by phone at 040 - 2 504 504 or via the contact form below.