Amendments in the 30%-ruling benefit
The 30%-ruling is a tax ruling for people who move to the Netherlands from abroad. The ruling compensates for so-called extraterritorial costs, meaning the extra costs that an employee makes by moving to a different country. Every few years, this ruling is reviewed and amended. Recently the government announced that the 30% ruling will be capped per 2024.
Capping of the ruling
In the spring of 2022, the government proposed to cap the 30%-ruling. The parliament has now accepted this proposal. Per 1 January 2024, the 30%-ruling for incoming employees will be capped at the so-called “Balkenende-norm”. For 2022, this amount is € 216.000 per year, other amount will be set for 2023 and 2024. This means that – in theory, the ruling hasn’t gone into effect yet- the 30% ruling may still be applied for salaries up to € 216.000. Any amount above that, will be taxed at the full tax rate.
Reimbursement of actual costs and 30% ruling?
Instead of applying the 30%-ruling, employers also have the possibility to reimburse the actual extraterritorial costs of their employees. Now that that the 30%-ruling will be capped, it might become more interesting for employers to interchangeably reimburse the actual extraterritorial cost and to apply the 30%-ruling benefit.
In order to avoid this, the employer must most probably explicitly choose which one of the options will apply per calendar year. If approved, this proposal will come into force on 1 January 2023. An exception to this will apply for the first four months of employment due to the processing time for the Tax Authorities.
What does capping of the 30% ruling mean for your employees?
Suppose the income of your employee is € 290.000 per year. In the ‘new’ 30% ruling, with capping, this means:
30% of € 216.000 = € 64.800 is free of taxation.
€ 290.000- € 64.800= € 225.200 will be taxed conform the normal tax rules.
As said, the capping of the 30%-ruling will come into force per 1 January 2024. A transitional period will apply for incoming employees for whom the 30%-ruling has been applied over the last fiscal period of 2022. For those employees, the cap will apply from 1 January 2026 onwards.
Basic requirements 30% ruling stay the same
Other than that, the basic requirements will remain the same:
- You or a previous employer in the Netherlands hired an employee from abroad;
- The employee lived at a distance of more than 150km from the Dutch border for at least 16 out of 24 months directly prior to the start of the employment;
- The salary of the employee meets the minimum salary criteria, which change on an annual basis.
If you would like to know more about Settle Service’s assistance with the 30%-ruling, please feel free to contact us at email@example.com