Netherlands’ ‘30 Percent Rule’ Restrictions Passed by Parliament

On December 19, 2023, the upper house (Senate) of the Dutch parliament approved the 2024 tax plan, as well as the Minimum Tax Act 2024 (Pillar Two).  These amend the Dutch corporate income tax act and Dutch personal income tax act, including the introduction of restrictions on the 30% facility.

Key Information

• Currently, eligible highly skilled foreign workers are not required to pay tax on up to 30% of their income for five years (reduced from eight years in 2019). This is justified as a reimbursement for costs incurred in moving to the Netherlands form abroad.
• From January 1, 2024, this reimbursement can only be up to a maximum of EUR 233,000. It is also permitted for employers to reimburse the actual moving costs of the employee, instead of using the 30% facility.

By the Numbers

• The first amendment requires that, effective January 1, 2024, the 30% ruling for new applications can only be applied to a maximum of 30% of the taxable salary for the first 20 months.
• In the following 20 months, the rule can be applied up to a maximum of 20% of the taxable wage.
• The following 20 months only up to a maximum of 10% of taxable wages.
• After 60 months, the maximum duration of the 30% ruling has expired.

Foreign employees already using the 30% ruling before January 1, 2024 will not be subject to the reduction.

• The second amendment regulates the abolition of partial foreigner taxpayer status by 2025. Currently, foreign workers who are resident in the Netherlands and use the 30%-ruling can select partial foreign taxpayer status in their income tax return so that, for the purposes of Box 2 and Box 3, they are considered foreign taxpayers despite being resident in the Netherlands.

Foreign national residents who already use this facility before January 1, 2024 can continue to use the partial foreign tax liability until 2026 at the latest.

Erickson Insights