Expat Tax Regime in Netherlands To Be Modified
The Dutch State Secretary for Finance recently announced that changes would be made
to the ‘30% ruling regime’ for expatriate employees in
the Netherlands, which is expected to come into effect in 2012.
Expatriate employees in Netherlands, working on a temporary basis can avail of “the
30% ruling regime”, resulting in a 30% tax free employment income in their hands.
This provision was introduced by the Dutch Government to compensate them for specific
expatriate costs.
The current conditions for application of the ruling are:
- The employer must be obliged to withhold wage tax;
- The employee must possess specific expertise which is not easily available in the
Dutch domestic labor market;
- Specific expertise is determined by a combination of the following conditions:
(i)The employee's level of education;
(ii)The net salary range with regard to the employment in the Netherlands compared
to that in the expatriate's country of origin; and
(iii)The employees must meet the required work experience with respect to the specific
employment. If the expatriate possesses experience of at least 2.5 years in a comparable
employment, the experience criteria are deemed to have been met.
If the condition (iii) is not met, they could still qualify for the 30% ruling,
if conditions (i) and (ii) are met.
Duration
The duration of the 30% ruling regime is of 120 months, which commences from the
date of employment in Netherlands.
This time period could be reduced if employment or stay in the Netherlands has been
terminated within a period of 15 years before the start of the new employment and
provided the employee was appointed or residing in the Netherlands 10 years prior
to being hired.
Proposed Changes
- Expertise - the employee needs to possess specific expertise, which
has limited availability in the domestic labor market; will be deemed to be met
if the employee earns a minimum salary;
- Time Period - the period which is taken into account for a reduction
of the duration of the 30%-ruling will be increased from 10 to 25 years;
- Place of residence - Employees living within 150 km from the Dutch
border are no longer entitled to the ruling;
- Education - Younger employees, who started work after undertaking
Ph.D. studies in the Netherlands, can apply for the 30% ruling.
The minimum salary required to meet the special skills criterion under the 30%-ruling
is set at EUR 50,619.
Please call/email for more details. Read more on
Expat Tax
Disclaimer :
Published: October 11, 2011. The information provided on this page is intended merely
to highlight issues for general information purposes only. It is not comprehensive
nor does it provide legal advice. Any information is subject to change without notice.
No liability whatsoever is accepted by Nair & Co.
|