ExpatBriefing: Netherlands To Shorten Expat Tax Scheme

By Hans Esser, for ExpatBriefing.com 27 April, 2018

The Dutch Government has proposed shortening the duration of the special tax scheme for expatriate workers from eight years to five.

The Ministry of Finance announced on April 20 that the proposal has been agreed by the Council of Ministers and will be effective from January 1, 2019. The reduction will apply to both existing and new users of the scheme.

The decision follows a review of the so-called 30 percent ruling by the research bureau Dialogic, which concluded that around 80 percent of employees do not use the scheme for more than five years. The remaining 20 percent who use the scheme for up to eight years tend to remain in the Netherlands for the long-term, rather than return to their country of origin, it found.

The review also found that comparable expat tax regimes in neighboring countries typically last for five years, the Ministry said.

The 30 percent ruling provides an income tax exemption for qualifying expat workers of up to 30 percent, subject to a minimum salary requirement, which in 2018 is EUR37,296 (USD45,476) per year. This is intended to offset the additional costs expats may encounter when moving to the Netherlands for work.

In order to qualify for the 30 percent ruling, the expat's employer must demonstrate that the employee possesses specific expertise that is either unavailable in the Dutch labor market or is in short supply.

Tags: Expatriates | Finance | Tax | Netherlands | Employees | Individual Income Tax | Expats |