Poundwise is specialized in 30% tax ruling applications. Therefore we would like to be ahead of any changes that could affect you as an employer or employee.
Recently changes for the year 2019 have been announced even if you already have the 30% tax ruling at this moment. Your employer applies or has applied the so-called facility for you. This is the reason you have received a letter from the Dutch tax authorities. When the 30% facility is applied, a part of your wage is exempt from tax.
The Dutch government intends to reduce the duration of this 30%facility from 8 to 5 years. The government’s intention is to enforce this change per January 1, 2019. This proposal will not become definitive until it has been adopted by the Dutch parliament, which is expected to do so at the end of this year. Reducing the duration of the 30% facility has financial consequences for you and your employer. We therefore consider it appropriate at this stage to inform you of consequences of this reduction.
The decision from the Dutch tax authorities has currently a maximum term of 8 years. For people who were granted the 30% ruling before January 1, 2012 the maximum term is 10 years. The term on the decision letter from Dutch tax authorities is less than the maximum term, if you have lived or worked in the Netherlands during the 25 years before the date of arrival. The following periods in the previous 25 years do not reduce the term:
A maximum of 20 working days per year in the Netherlands;
Holiday, family visit or any other private reason for a maximum of 6 weeks a year or a one time period which does not exceeds 3 months;
Work or residence abroad as an employee outside of the Netherlands.
8 years term versus 5 years term
Lately the 30% ruling changes have been subject of several political discussions. One of the discussions was about a possible abolishment of the 30% ruling. Good news is that the plan is not to abolish the 30% ruling itself.
New 30% ruling rulings
We do not expect the reduction of the maximum term will influence the 30% rulings granted before January 1, 2019. In the past the 30% ruling changes were published starting on January 1, 2012 had transitional law for 30% rulings granted before January 1, 2012. The transitional law made is possible for 30% rulings granted before the change to still take the 10 years (under certain conditions) into account.
Consequences of the reduction In the duration
No longer being able to apply the 30% facility has consequences for your net income. This depends on the individual contract you have with your employer. Your employer (or Poundwise) can provide you with more information about this. The shorter duration also has consequences for the possibility of opting for partial non-residential taxpayer status for income tax. This is because you can only opt for partial non-residential taxpayer status as long as the 30% facility is applied. This means that almost all savings and investments worldwide will be taxed in the Netherlands. Poundwise can look into the options to reduce the consequences of this change.
Legislative process of the reduction in the duration
The government intends to incorporate the changes in the 2019 tax plan, that will be disclosed on this year’s Budget Day. It is expected that the proposal will be adopted by the Dutch parliament at the end of the year.
If you have any questions, please contact us by sending an email to our info box (email@example.com).