[fa icon="calendar'] Aug 20, 2018 @ 03:45 AM / by Jeremy Piccoli

The Hague, Netherlands as seen during an on-site AIRINC cost of living survey.

2019 Tax Plan Change in the Netherlands

On April 20, 2018, the Dutch Ministry of Finance announced that the 2019 Tax Plan will include an amendment to the ‘30% ruling’ for expatriate employees, shortening the eligibility from 8 to 5 years, effective January 1, 2019. This change will affect both existing and new cases but will not impact the other conditions of the expatriate tax ruling.

Background

The ’30 ruling’ is a benefit available to qualifying expatriates, which allows the employee to a tax-free allowance or reimbursement equal to 30% of their employment income. To qualify, the employee must be hired from outside the Netherlands, and qualify as a ‘highly skilled’ worker with knowledge outside the Dutch labor market. The employee may not have been a resident in a country within 150 kilometers of the Netherlands border prior to employment in the Netherlands.


Join now to stay up-to-date on the latest happenings in Global Mobility!


Who is impacted?

The reduction in qualifying period from 8 to 5 years impacts both new applicants and individuals already benefitting from the tax advantage:

 

  • Individuals that have already been utilizing the ‘30% ruling’ for more than five years will lose the tax advantage as of 1 January 2019, whether they benefited from the eight-year exemption or the 10-year exemption (beginning before 1 January 2012).

 

  • Individuals that are still within the first five years of their 30% tax ruling will stop benefiting from the tax exemption after five years.

 

  • Individuals being hired and qualifying for the 30% ruling receive it for five years.

 

Action

Employers should identify their ‘30% ruling’ employee population, and evaluate the potential cost increases for equalized individuals, and the net salary received by non-equalized employees working in the Netherlands. Cost estimates that assumed an eight-year qualifying period may need to be revised. In addition, a communication plan should be put into place for all impacted employees.

How can AIRINC help?

Contact our Advisory team by clicking below:

Learn More

 

Topics: Tax, International Tax