In the Netherlands, highly-skilled people who previously lived abroad and have been recruited to perform a specialist job, can benefit from a so-called ‘30% ruling’, which means the first 30% of income is tax exempt.
Although in previous years, this ruling could last for up to 10 or eight years, from 2019, the maximum period is five years, even for applications that were initially due to run longer.
‘This also means that everybody who has previously have a 30% ruling, even before 2021, can only have this for just five years,’ says a spokesman from Blue Umbrella. ‘Even if the ruling was granted in the beginning for eight or for 10 years.’
With this in mind take a good look at your decision form the Dutch tax office about the 30%-ruling. If you have been granted the 30%-ruling in 2018 then the initial decision from the Dutch tax office may state that the 30%-ruling is active until 2026, but due to this change of regulation the 30%-ruling is only applicable until 2023.
When your period has ended, the tax deducted at source will automatically be changed if you have an employer, but you may still need to alert your accountant to your status because it can affect other areas of your tax.
For example, if you have the 30% ruling, assets such as savings and small shareholdings can be viewed as partially exempt from Dutch taxes, in the ‘box 3’ portion of your taxes. The change can also affect how your spending power is assessed, for instance, with a mortgage loan.
The change in the 30% ruling was instituted when the Dutch government altered dividend taxes, meaning a fall in revenue from that source.
It also means that if you have previously benefitted from several years of the tax perk, these will be deducted from the five-year maximum if you resume work in the Netherlands and qualify again.
‘Most people on the 30% ruling do move after four or five years,’ said the spokesman. ‘Just a small proportion stay for longer.’
For advice on the 30% ruling, contact Blue Umbrella.