The expatriate community in the Netherlands is familiar with the 30% ruling regime which exempts temporary workers from paying taxes on 30% of their income. Initially set up to compensate workers from the additional costs incurred due to relocation, this may no longer be the case.
Now, expats in the Netherlands are up in arms about a recent provision that will modify eligibility and duration of this rule. The Dutch government announced that if passed, the new changes will be implemented in 2012. The following changes would go into effect for foreigners hired abroad by a company located in the Netherlands:
- Younger employees who begin work after their Ph.D. program can apply for the rule
- Employee must have a specific expertise not easily found within the country’s labor market
- Employees living 150 km from the Dutch border will no longer be entitled to the rule (for example, residents of Germany)
- The length that this rule applies for will be reduced
Currently the 30% rule extends from the first day of employment for 120 months – or 10 years total. If the provision is accepted, the duration of the rule may be reduced if an individual has been terminated from their job in the last 15 years before starting their new job or if the individual has been living in the Netherlands 10 years before starting their new job.
While this provision was just announced, many employers and expats in the Netherlands are predicting that these changes may effect the number of expatriates.