Expats working in the Netherlands have been enjoying the benefits of 30% Tax Ruling for a number of years. However, the Dutch government has announced that they are making some changes to the tax exemption. The new rules will come into effect on 1 January 2019.
What is the 30% ruling?
The 30% ruling is a tax advantage for the highly skilled migrant workers. The ruling allows employers to offer 30% of an employee’s salary to them tax-free, meaning that the employee only pays tax over 70% of their gross Dutch salary. The tax break is meant as a reimbursement for the relocation costs, including travelling, visas and housing.
What are the changes to the 30% ruling
Introduced on 10 October 2017, the “Confidence in the future” document announced plans to shorten the 30% ruling from eight to five years. On 24 April 2018 the plan was confirmed.
Who does the new 30% ruling affect?
The changes to the 30% tax exemption will not only affect the new applicants but will also be applied retroactively to the expats who are already enjoying the advantages of the tax rule.
- If you have been recently hired or are in the process of being hired by a Dutch company and have been approved for the 30% ruling, you will be receiving it for five years.
- You started receiving the 30% ruling before 1 January 2012, you will lose this tax advantage as of 1 January 2019, whether you benefited from the eight-year exemption or the 10-year exemption
- If you are still within the first five years of your 30% tax ruling, you will stop benefiting from it as soon as you hit the five-year mark.
Have planned your future according to the original eight-year duration of the 30% ruling – including investing, buying property, or even having children? You may have to re-evaluate your projects. It would be a good idea to speak to a financial advisor.