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Newsflash November 2011

Amendment of the 30%-ruling

We refer to our Newsflash of September 2011 in which we discussed the proposed changes of the 30%-ruling by the Dutch government. For your information we have included the proposed changes again below:

  1. The condition of specific expertise will be connected to a fixed salary standard. This salary standard will be based on the so called ‘Kennismigrantenregeling’. For 2011 the salary standard is € 50.619. This salary does not include the compensation of the 30%-ruling. Concrete: the employee who wants to meet the criteria of the specific expertise needs to earn at least € 72.313. Please note that this is the applicable amount for 2011. Probably the salary standard for the “kennismigrantenregeling” will be increased per January 1, 2012, so this means that the salary criteria for the 30%-ruling will also increase.
  2. The current 30%-ruling is only applicable for a maximum period of 10 years. All periods spent in the Netherlands in the 10 previous years measured at the time of requesting for the 30%-ruling, will be excluded from this 10 years period (please note that if you spent more than a certain amount of days within a calendar year, for private or for business purposes in the Netherlands, this period can be increased by any period of stay that ends in the 15 year period prior to the start date of the 30%-ruling). As of January 1, 2012 the exclusion period will be determined over a period of 25 years. This amendment is not only important for foreign employees who start working in the Netherlands but also for re-entering Dutch employees. They will have to spent at least 25 years in a foreign country, before they will be entitled to the 30%-ruling.
  3. Employees who live less than 150 kilometers from the boarder of The Netherlands will not be entitled to the 30%-ruling.

New proposed changes (formulated in the letter from the Government on November 11, 2011)

Please note that the proposed changes regarding the 30%-ruling were discussed in the Dutch Parliament on November 7, 2011. Based on this discussion the Dutch Government has now formulated some amendments on their first proposal. Please find below the new proposed changes which are all relating to the original changes in the first bullet (please see above):

  1. There will be a general salary criteria of € 50,000 (this is including the compensation of the 30%-ruling); The first proposal was a general salary criteria of € 72.313;
  2. There will be no salary criteria for foreigners who have obtained a doctorate; The first proposal was a salary criteria for this group of € 38.007, including the compensation for the 30%-ruling;
  3. Foreigners who hold a Master degree and are younger than 30 years at the moment they are recruited from abroad will be eligible for the 30%-ruling if they receive a salary of € 38.007 (including the compensation for the 30%-ruling).

Please note that the above three amendments will have a positive effect on the Dutch employment market, meaning that more foreigners, (especially youngsters with less experience and less salary) will still meet the criteria for the 30%-ruling.

Because the Government needs to compensate the financial loss of the income of taxes, they want to adjust another part of the ruling. They have formulated 5 ways to change the ruling in a way that the tax losses will be compensated. The 5 proposals are formulated below.

  1. Reduce the percentage of the tax free percentage after 5 years from 30% to 22,5%;
  2. Reduce the percentage of the tax free percentage for new cases from 30% to 27,5%;
  3. Reduce the percentage of the tax free percentage for all current and new cases from 30% to 28,5%;
  4. Reduce of the maximum term of the ruling from 10 years to 8 years;
  5. Maximize the tax free remuneration of 30% up to a maximum taxable salary of € 714.286 for all cases.

Finally, we want to inform you that the above changes are, again, still proposals and need to be discussed in the parliament. We hope to provide you with definite information with regard to the changes on this subject very soon. We will keep you updated!!

Please feel free to contact us to discuss how the changes will affect you and your employees in more detail. You can reach us on the following number (+31)040-8001940 or e-mail us at info@tgbstone.com.