Term 30%-ruling to be reduced to 5 year

16 May 2018

The State Secretary of Finance recently informed the lower chamber of Parliament on the evaluation of the so-called 30% ruling. In this evaluation the announcement is included that the intention is to reduce term during which the 30% ruling can be applied,  from the current 8 years  to a 5 years maximum. The government aims to enact this change per January 1st, 2019.

The 30% ruling for inbound expatriates allows the employer to pay roughly 30% of the agreed compensation free of tax to the expatriate.  This ruling is intended inter alia to help attract employees with specific, scarce expertise and skills, but also to compensate the expatriate for certain expenses in the Netherlands, such as extra costs for housing and subsistence.

Why reducing?

From the evaluation of the 30% ruling it appeared that approximately 80% of the expatriates do not stay in the Netherlands / use the 30% ruling for more than 5 years. For the 20% that does exceed this 5 year stay, a substantial part does not stay in the Netherlands temporarily but on a more permanent basis. This is a reason for the government to reduce the term of the 30% ruling for expatriates by three years. In nearby countries with comparable tax facilitation, a term of 5 years is almost without exception applicable.

It is expected that around the third Tuesday of September, the first legislative proposals will be published and at that time more clarity will be provided on whether any form of possible grandfathering rules for currently granted 30% rulings will be included. As more clarity becomes available, we will of course inform you as appropriate at that time.

More information

Would you like more information about the 30% ruling or cross-border employment? Please contact our specialists cross-border employment.