On October 26, 2018, Dutch State Secretary of Finance has proposed an amendment to the tax bill for 2019 in order to reduce the maximum term of the 30% ruling from 8 to 5 years as of January 1, 2021.
If approved by the Dutch Parliament, the new rule regarding the 30% ruling will enter into force as of January 1, 2021 and will affect both new and existing cases.
Below a brief summary of the benefits of the 30% ruling:
- Employers may pay a tax free allowance to foreign employees to cover the extra costs due to working in the Netherlands.
- A resident taxpayer can opt for the status of “partial non-resident taxpayer” and choose for Dutch taxation on limited source of income.
- US nationals or holders of a green card, as “partial non-resident taxpayer” status, may exclude remuneration relating to non-Dutch work days from the Dutch taxable base.
- A foreign driving license can be exchanged for a Dutch license without taking any tests or exams.
- If part of the company’s policy, fees for international schools can be reimbursed or paid tax exempt.
Instead of the above allowance, an employer may choose to reimburse the actual extraterritorial costs tax exempt up to certain extent. As part of the changes and if accepted, this option will also be ceased per January 1, 2021.