The Netherlands is set to introduce significant changes to the 30% ruling, effective from January 1st, 2024. These amendments, including a salary cap and a gradual reduction in the tax exemption percentage, are pivotal for expatriates and employers alike. Here’s what you need to know:
Introducing the Cap: The Balkenende Norm
From 2024, the 30% ruling will have a salary cap, known as the Balkenende norm. This means that the ruling can only be applied to a maximum salary of €233,000. Any income exceeding this limit will not benefit from the tax exemption. This cap aims to align the tax benefit more closely with average income levels in the Netherlands.
Transitional Period for Current Holders
If you were benefiting from the 30% ruling as of the end of 2022, don’t worry – the cap will only apply to you from January 1st, 2026. This transitional period provides current beneficiaries ample time to adjust to the new regulations.
Gradual Reduction of Tax Exemption Percentage
Another crucial change is the phased reduction of the tax exemption percentage over the next few years:
- For the first 20 months, a 30% wage exemption will apply.
- This will be followed by a 20% exemption for the next 20 months.
- Finally, a 10% exemption will apply for the last 20 months.
This staged approach is designed to ease the transition for individuals who benefit from the 30% ruling, ensuring a gradual shift rather than an abrupt change.
How Does This Affect Existing 30% Ruling Holders?
If you’re already under the 30% ruling and the benefit was applied to your salary at the end of 2023, you’ll continue to receive the benefit according to the pre-2024 rules. This transitional arrangement ensures that current beneficiaries aren’t suddenly disadvantaged by the new legislation.
Upcoming Re-evaluation
It’s important to note that these changes, particularly the phased reduction, are still subject to a revaluation expected in spring 2024. The Dutch government aims to yearly reassess the impact of these amendments.
What Does This Mean for You?
These changes highlight the Dutch government’s effort to balance the needs of the international workforce with fair tax policies. For employers and expatriates, it’s essential to stay informed and prepare for these adjustments.
If you’re unsure how these changes impact you or need assistance navigating the new rules, our team at Anywr Netherlands is here to help. Please feel free to reach out to us at info.nl@anywr-group.com.
