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Newsflash September 2011

Amendment of the 30%-ruling

The Dutch government is planning to change the 30%-ruling. Below you find an overview of the three suggested restrictions.

  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.

Besides the restrictions, the 30%-ruling will be expanded for foreigners under the age of 30 who obtained a doctorate in the Netherlands and who start working within one year after graduating. At this moment they are not entitled to the 30%-ruling since they do not meet the criteria of an incoming employee. The proposal is to ignore the period of this PhD period so that they are recruited from abroad per the start date with the company. For these kind of employees a lower salary norm will be introduced (in 2011 € 26.605 excluding 30% compensation which is € 38.007 including this compensation). Please note that also for candidates that obtained their doctorate outside the Netherlands, this lower salary criteria is applicable.

Please note that these amendments are in process right now. It is not sure yet that these changes will be introduced into the Dutch fiscal law per January 1, 2012. The Dutch government will first have to agree with it.

However since there is a chance that these amendments will be applicable, we give the following advise.

  • If you decide to hire a foreign employee who might meet the current criteria for the 30%-ruling, we advise you to apply for this ruling as soon as possible, but in any event before the end of this year.
  • If the above mentioned amendments will be applicable from January 1, 2012 and your incoming employee does not meet the new requirements of the 30%-ruling, you can give your foreign employee a tax free compensation for the extraterritorial costs that he or she faces. Please note that you can only compensate the real costs that he or she had to make. Please also note that not every extra costs will be seen as an extraterritorial cost.
  • You might focus on young employees who obtained a doctorate as for these employees the lower income criteria is applicable.
  • Please note that you need to inform your employees, that currently have the 30%-ruling, that this might only be applicable for 5 years. After 5 years the Dutch tax authorities have the right to again check whether the employee meet the criteria for the 30%-ruling. If the employee does not meet the salary criteria after 5 years (in other words, if he does not have a gross salary of at least € 72.313 at that time), the Dutch tax authorities will probably end the 30%-ruling of the employee.

With the information above we trust we informed you sufficiently about the changes in the 30%-ruling. 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.