2024 changes: the 30% ruling
An article by Blue Umbrella
As we approach 2024, significant amendments to the Netherlands' 30% ruling for expats are poised to reshape the landscape for international talent and their employers. This article gives a detailed preview of the changes set to take effect from January 1, 2024.
1. Cap Introduction
One of the most impactful changes is the introduction of a cap on the 30% ruling, aligning it with the Wet Normering Topinkomens (WNT norm) at €223,000 per year. This shift signals a departure from the previously unlimited benefits that have long attracted foreign workers to the Netherlands.
2. Gradual Reduction
Expect a phased reduction in the untaxed refundable portion of taxable wages over three successive 20-month intervals. Starting at 30%, this portion will gradually decrease to 20% and then further to 10%. This nuanced approach aims to curtail the financial benefits enjoyed by expats over an extended period.
3. Transition for Existing Beneficiaries
For employees already benefiting from the 30% ruling, a transitional arrangement is in place until the last pay period of 2023. While existing austerity measures and the WNT norm cap persist for this group, the reduction of the 30% ruling percentage does not apply. However, this reprieve is time-bound, with the option to opt for the notional foreign tax liability ending on December 31, 2026.
4. Administrative Burden
Employers will face an increased administrative burden, monitoring fluctuating percentages of the 30% ruling over a five-year period. This complexity extends beyond calculations, requiring decisions on reimbursing various expenses, adding layers of uncertainty to the employer-expat relationship.
5. Long-Term Implications
A far-reaching consequence is the decision to abolish notional foreign tax liability as of December 31, 2026. This means that the option to opt for notional foreign tax liability will not be honored for employees currently benefiting from the 30% ruling throughout its entire term.
In this evolving landscape, Blue Umbrella stands ready to assist with the 30% ruling application process, providing expert guidance during these transformative times. Contact our team for personalized assistance in navigating the financial intricacies of 2024.