Last night a number Dutch House of Representatives approved an amendment to limit the 30% ruling. 30% ruling in 2024 – new limits. Which limits are we talking about?
3 * 20 months
As we speak an approved 30% ruling is valid for 5 years. Starting from January 1, 2024 the tax benefit will be maximally (depending on salary level an employee can also be partially eligible) as follows:
- first 20 months: 30%
- next 20 months: 20%
- last 20 months: 10%
This measure means a cost saving of around € 200 million. A lot of money on the short term. However, in the longer run we think that this is not a wise thing to do. Many employees who consider to move to the Netherlands will now go elsewhere. Somewhere where the cost of living isn’t as high as in the Netherlands. Or somewhere where the tax rates are more attractive than in the Netherlands.
More and longer open vacancies
This will mean that Dutch companies will have more and longer outstanding open vacancies. It is already hard to find the right people, many companies have a hard time due to the tight labour market. In the end it might be that they will not survive without the personnel they need. And then? Fewer tax income for the Dutch state!
I do understand that, with upcoming elections in mind, political parties want to put themselves in the spotlight. However, this measure will in my eyes have the opposite effect compared to the intentions.
More tax measures
The House of Representatives also agreed on the more tax measures, that will have a big impact on wealthier employees.
The partial foreign tax liability will also be abolished as of 1 January 2025. This means that from 2025 onwards, incoming employees will be taxed in the regular way for income in Box 2 (income from significant interest) and Box 3 (income from savings and investments).
Transition period 30% ruling in 2024- new limits
For employees who receive a tax-free reimbursement in the last period of 2023, and have a valid 30% ruling in place, a transitional arrangement will be in place. These situations will not be affected by the proposed amendment.
The 30% ruling, what is that?
If you want to know more about the current 30% ruling, please read the following: https://www.settleservice.com/30-ruling-service/.
You can always contact us on firstname.lastname@example.org.