The Dutch government has announced that they have agreed to a delay on implementing the 30% tax ruling changes to ease the burden on expats and boost industry.
In April 2018, the Dutch government had indicated that it would modify the 30% tax ruling, previously announced in October 2017. The duration of the 30% tax exemption offered to highly skilled migrants to the Netherlands was under discussion to be reduced to five years from the original eight years, effective as of 1 January 2019.
Now, after a series of discussions, they have agreed that they will extend the effective date by two years, pushing this out till 2021. This will no doubt be welcome news to the many expats in the Netherlands who had been taken by surprise by the decision and were scrambling to alter their financial affairs.
Lennart Suurmond, tax consultant with J.C. Suurmond & zn, provides answers to some of the key questions.
What are the changes to the 30% ruling?
Introduced on 10 October 2017, the “Confidence in the Future” document drafted by the Dutch government had announced plans to shorten the 30% ruling from eight years to five years. On 15 October 2018, that plan was postponed and a new date of implementation was confirmed as 2021.
Who does the new 30% ruling affect?
Expats who benefit from the 30% ruling are usually highly skilled migrants who were hired by Netherlands-based companies from abroad. The exemption is considered a compensation for the costs of relocation to the Netherlands.
The new duration of the 30% ruling would have not only affected all new applicants, but also been applied retroactively to the expats who are already benefiting from the tax advantage, which caused an uproar not only from the affected employees but also from companies who use the 30% ruling to attract foreign workers.
The new decision, which pushes the change to 2021 and enables a smoother transition period, means that:
- If you have been subject to the 30% ruling for more than five years already, you will not lose this tax advantage in 2019 or 2020 provided you are still within the initially granted period (whether 8 years or 10 years).
- If you received your 30% tax ruling between 2013 and 2016, you will only stop benefiting from the tax exemption in 2021.
- If you received your 30% rax ruling after 1 January 2016, you will keep it for five years.
- If you are in the process of being hired by a Dutch company and have been informed that you will benefit from the 30% ruling, you will receive it for five years.
What happens if I am changing jobs?
Expats who are moving to a new position or a new employer will still be able to receive the 30% ruling, as long as they are still within the originally granted period. See the list above to figure out exactly when you will stop receiving the 30% ruling.
As for persons for whom the ruling was granted more recently (all applications granted after 1 January 2016), they will stop benefiting from the 30% ruling as soon as they hit the five-year mark.
What can I do about my new 30% ruling situation?
With the new 15 October 2018 decision extending the original 8-year period of the 30% ruling until 1 January 2021, the transition between the old and new duration of the 30% ruling will be much easier for expats who had been scrambling to get their financial affairs in order by 1 January 1 2019. The need to revise your projects and your financial situation – investing, buying property, or even having children – is not as urgent.
It may be a good idea to speak to a financial advisor to get a better picture of what this means for you if you are affected – especially if you were granted the 30% ruling after 1 January 2016.
In the meantime, there is also a petition by Screwed Expats to the Dutch Ministry of Finance on change.org.
|Lennart Suurmond completed several fiscal studies and joined J.C. Suurmond Tax consultants in 2003. J.C. Suurmond was established in 1986 by his father and the company’s focus has always been on service and results. Tax advice, tax returns, international income and assets, advice re immigration are the main fields where Lennart has experience.|