People from abroad who work in the Netherlands can receive a maximum of thirty percent of their wages tax-free. This is the so-called “30% rulingfacility”. In this way, the Dutch government compensates foreign expats for their additional expatriate expenses in the Netherlands, also known as ‘extraterritorial costs’.
It is proposed that as from (likely) 1 January 2024, the 30% facility for incoming employees will be limited to the so-called “Balkenende standard” / WNT norm. For 2022 this standard is € 216,000 on an annual basis for salaries obtained from one employer or a group of employers. This results in a maximum tax-free 30% reimbursement of EUR 64,800. There is a transitional arrangement for incoming employees to whom the 30% facility has been applied for the last pay period of 2022. The capping of the 30% facility will only apply to them as of 1 January 2026.
According to the proposal, a choice should be made per calendar year for the reimbursement of extraterritorial costs on the basis of the actual claim or on the basis under the 30% ruling facility. An exception to this is made for the first four months of employment due to the process of applying for a so-called 30% ruling. The proposed measure on the basis of which a choice must be made applies to all extraterritorial employees, i.e. to both incoming and seconded employees.
Employees with taxable salaries above the WNT norm will then no longer be able to use the 30% facility on the excess (unless they choose for compensation on actual ‘extraterritorial costs’ which would be higher than the fixed 30% reimbursement). The change will not affect most internationals, because they usually do not exceed this WNT norm.
Fortunately, no changes have been proposed regarding the other benefits of the 30% ruling, such as the tax free reimbursement of school fees, the important exemptions in Box 3 and Box 2 and the easy driver’s license transfer.