Recent developments Dutch 30% - ruling for expatriates

As you might be aware the Dutch fiscal legislation incorporates specific legislation in the form of the 30%-ruling which facilitates the hiring of foreign employees possessing scarce specific knowledge not readily available on the Dutch labour market. If granted (following separate application with the Inland Revenue), the employee may receive approximately 30% of his gross salary income tax free in order to cover for special costs relating the transfer to the Netherlands. In the past the applicable term for this ruling was already shortened from 10 to 8 years. However, the Dutch government has now proposed legislation in which they propose to limit the duration even further, from 8 to 5 years. Argument for this proposed change is that studies have shown that within a 5-year period either the employee in question determines and leaves the Netherlands or decides to remain in the Netherlands and switches jobs.

Although a limitation in time is not directly a problem as such, the Dutch authorities however also envisages this limitation to be applicable retrospectively. As a result, current applicable rulings granted for an 8-year period would automatically lapse/become void after the new period of 5 years has transpired. Whether or not this part of the proposed new legislation will be adopted is currently not yet clear, but we strongly recommend employer with employees who currently benefit from the 30% ruling to re-assess the current agreements reached up on hiring of the employee in question in order to determine the consequences financially. For example, if an employee is being employed on a net salary agreement, the loosing potentially of 30% net income will need to be compensated by the employer with as a result a possible substantial wage cost for the employer.

For further information or assistance about this topic please do not hesitate to contact either Bart van Gool or Ruud van Poppel.

Wesselman Website: https://www.wesselman-info.nl/ 

 

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