30% Ruling Reduced to 5 Years

Published on 30 April 2018

In April of 2018, the Dutch government announced a proposal to reduce the maximum term of the 30%-ruling from eight years to five years. The 30%-ruling offers the possibility for an employer to make 30 per cent of an employee’s salary tax-free. It only applies to foreign employees that come to work in the Netherlands on a temporary basis which is why this ruling is often referred to “the expat-ruling”. The original intent of the law was to attract highly qualified expat employees to the Netherlands.

What are the changes?

If the proposal is accepted, then from January 1st 2019 the 30%-ruling will be operating under new conditions that are detrimental for expat workers and employers.

  • Employees that already joined the 30%-ruling for the past five years will lose their tax benefit as of 2019.
  • Non-residential tax will also be reduced to five years.
  • Any extra territorial costs will not be reimbursed after five years.
  • The remaining conditions of the 30%-ruling will remain unchanged.

What are the consequences?

Expats and their employers are worried about the outcomes of this new proposal. Many employers signed contracts with their employees based on a salary which took into account the 30-% ruling for eight years, rather than only five years. It can have severe consequences for the ongoing employment of expats if the law should change.

The government still needs to vote on the new proposal and determine if it should also affect existing employment situations. As of now, is unknown when the vote will be taking place.

We will keep you updated!

As part of the Voerman Group, Eurohome Relocation Services can assist you with the application process of the 30% ruling. If you would like to know more about the services of Eurohome Relocation, please click   here to visit the website.