On October 27, 2023, the Dutch House of Representatives passed two amendments to the 2024 Tax Plan which, if approved by the Senate, will further scale back the so-called “30% ruling”.
- 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.
Proposed Changes
- 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.
- Transitionally, 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.
- Transitionally, 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
Erickson Immigration Group will continue to monitor developments and share updates as more news is available. Please contact your employer or EIG attorney if you have questions about anything we’re reporting above or case-specific questions.