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30% ruling from 8 to 5 years as per 1 January 2019
The maximum amount of years the 30% ruling may apply has been reduced from 8 to 5 years as per 1 January 2019. The 30% ruling is essentially a tax credit for expats working in the Netherlands to compensate for the additional costs expats usually make for working away from their home country. By applying the 30% ruling the employer can pay out 30% of the salary tax free. Therefore, the reduction can result in significantly lower net wages for expats with the 30% ruling.
The reduction applies to current and new 30% rulings. However, for current rulings, i.e. rulings granted before 1 January 2019, there is transitional law for a period of 2 years. The transitional law results in the following for rulings granted before 1 January 2019:
|
End date on ruling in year: |
New end date of ruling |
|
2019 or 2020 |
End date as stated on ruling (no changes) |
|
2021, 2022 or 2023 |
31 December 2020 |
|
2024 or later |
End date as stated on ruling minus 3 years |
Practical implications:
- Employers need to check whether they should stop applying the 30% ruling sooner than expected for their employees and adjust wage tax withholdings/payments accordingly;
- Employees need to check if their 30% ruling will have a new end date and act accordingly to prevent unpleasant financial surprises;
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