You are here: Home / Archives for All Articles / News on the 30% ruling

Changes in Dutch tax 2024 for companies and individuals

by

Comprehensive Introduction to the 2024 Tax Changes – An In-Depth Analysis

Major changes are planned in Dutch tax legislation in 2024. These adjustments are crucial for both private individuals and companies. Below is an even more comprehensive overview of the most significant changes, delving deeper into the background, possible consequences and broader context of these changes.

Increased Rates in Box 2 (substantial interest holding) and Box 3 (equity tax)

Box 2: The increase in the rate in box 2 to 33% for income above € 67,000 is a significant change for shareholders with a substantial interest. This change may lead to a reconsideration of dividend strategies and the timing of distributions. It is crucial for shareholders to review their tax planning in light of this change, especially given the potential impact on the net income and cash flow of their companies. This change may also impact decisions on corporate investment and restructuring.

Box 3: The increase in the rate in box 3 to 36% is a direct response to the long-standing discussion about the fairness of taxation on fictitious returns. This increase could have a significant impact on the net returns of savers and investors. It is advisable for taxpayers to reconsider their investment portfolios, especially in light of the new focus on actual returns. This could lead to a shift in investment strategies, placing more emphasis on wealth preservation and efficient tax planning.

SME profit exemption and IACK: What does this mean for Entrepreneurs and Families?

The adjustment of the SME profit exemption to 13.31% is a welcome relief for small and medium-sized businesses. This change can help reduce the tax burden on smaller businesses and encourage them to continue investing and growing. However, it is important that SMEs are aware of this change and adjust their tax strategies accordingly to take full advantage of the new regulations.

The postponed abolition and phase-out of the IACK until 2027 gives families more time to adapt. It is important for working parents to understand how this phase-out will impact their net income and adjust their financial planning accordingly. These changes could especially impact families with a single income or where one parent works part-time.

The Impact of the Retrenchment of the 30% Scheme and the Lowered Threshold for Excessive Borrowing

The reduction of the 30% ruling may have consequences for the attractiveness of the Netherlands as a work location for international talent. Companies that rely on expats may need to revise their compensation packages to accommodate these changes. This could lead to a reassessment of overall compensation strategies and possibly even a reconsideration of the use of international staff.

At the same time, lowering the threshold for excessive borrowing to €500,000 requires attention from directors and shareholders. It is crucial to reconsider the structure of personal and business finances to avoid unwanted tax consequences. This change could have significant implications for the company’s liquidity planning and overall financial strategy.

Energy Tax and Excise Tax Rebates: Direct Impact on Households

The reduction of energy taxes and the extension of excise duty discounts are measures that provide direct relief to households. These changes can help offset rising costs of living, especially at a time when energy prices are volatile. It is important for consumers to understand how these changes may affect their monthly expenses and to adjust their budgets accordingly.

Conclusion

The tax changes for 2024 are diverse and have a broad impact. They touch on various aspects of tax practice, from personal income tax to corporate taxes. It is essential that both individuals and companies are aware of these changes and prepare for them. A proactive approach and timely planning are crucial to optimally navigate the new tax landscape.

Annual indexation for 2020 minimum salary 30% ruling

by

Salary criterion –
A salary criterion is to be met to apply the 30% ruling, below is the annual indexation for the 2020 minimum salary to qualify for the 30% ruling. There are three qualifying salary groups:

1. Scientists do not have a salary minimum;

2. People below 30 years of age with a Masters education have a minimum salary requirement of EUR 29,149 (2020) / EUR 28,690 (2019) / EUR 28,350 (2018) excluding the 30% reimbursement and EUR 41,642 (2020) / EUR 40,985 (2019) / EUR 40,500 (2018) including the 30% reimbursement;

3. For Expats that do not match the groups under 1 and 2, a minimum salary requirement applies of EUR 38,347 (2020) / EUR 37,743 (2019) / EUR 37,296 (2018) excluding the 30% reimbursement and EUR 54,782 (2020) / EUR 53,918 (2019) / EUR 53,280 (2018) including the 30% reimbursement.

Please note that these minimum amounts are subject to annual indexation. In principle the salary criterion may not be decreased pro rata in case of a part time employment. There is an exemption on this rule in case of parental leave.

The salary criterion in principle replaces the prior criterion of required specific skills, in that sense the ruling has become more accessible. Please note however that the salary criterion is a continuous test, the employer is therefore held to continuously check whether all requirements are still met by its employee.

Here you can find full details on all criteria to be met in order to qualify for the 30%-ruling.

We can assist with the full process of obtaining the 30%-ruling, please contact us.

Application term 30%-ruling reduced to five years as of 2019

by

Both the Dutch House of Representatives and Senate have now approved the Tax Plan 2019 which includes the transitional rules for expats with a 30% ruling issued in 2018 or earlier. Therefore this new legislation will become effective as of January 1st 2019.

In short: As of the year 2019 the maximum application period for the 30% ruling will become five years. The application period of the existing rulings under the new legislation will depend on their current end date.

If the end date of an existing ruling is in 2019 or 2020, this end date will remain unchanged, if it falls in 2021, 2022 or 2023, then the new end date will be 31 December 2020. All later end dates will be shortened by three years. For a full up to date explanation of the 30% ruling, an overview of the current conditions and our related services, please click here!

For more background on the changes per January 1st 2019, please scroll down:

On September 18th (2018) the official tax plans for 2019 have been offered to Dutch Parliament (“Tweede Kamer”). Cabinet has now filed their official legislation proposal to change the application term of the 30% ruling to a five year application period also for existing pre-2019 rulings. This despite the advisory board of State advising against the reduction of the application term for existing cases.

As expected further discussion was caused by the final proposal. With the Cabinet currently re-evaluating the announced abolishment of Dutch Dividend Withholding Tax (DDWT), already plans evolve as to where the budget on not abolishing the DDWT can be spend on.

Since the abolishment of the DDWT was originally aimed at keeping the business climate of the Netherlands interesting for foreign companies, it seems only logical that in case the DDWT is not abolished, to keep the funds available for the original goal: Investing in the Dutch business climate. Cabinet is currently discussing these subjects, possibly the reduction of the application term of the 30% ruling will be less strict. We expect to have more clarity soon.

Till the year 2012 the maximum application term was still 10 years, as of 2012 this was reduced till 8 years and as of 2019 the application term is shortened till 5 years. Scroll down for a link to the official document.

The filed legislation proposal does contain a transitional arrangement for international schooling fees, which can remain to be reimbursed for the full eight year period for existing rulings.

However still Dutch Parliament (as well as Dutch Senate) has to decide on the proposed legislation changes. Based upon the changes of the year 2012, in which prior application terms were retained, the applicable terms valid before the year 2019 will hopefully still be respected. However this would have to follow from a Political amendment, so let yourself be heard in The Hague!

Because of this proposed reduction of the 30% ruling term, you may wish to consider to try and receive your possible bonus and/or exercise stock options rights before the new proposed end date of your 30% ruling so the ruling may still be applied.

Please contact us for further information on the 30%-ruling. We advise and prepare requests for application of the 30% ruling and we are also specialised in complex cases which HR departments or even big four firms are not equipped to handle.

Please be sure to also read the following related articles which may well lead to a tax benefit:

In addition we prepare income tax returns and can serve as a one-stop-shop for all your company’s tax / accountancy / legal requirements.

The new 30%-ruling plans, the above mentioned comments & full evaluation document (in Dutch): inetsreactie_op_de_evaluatie_van_de_30%-regeling_voor_ingekomen_werknemers_(Kamerstuk_34785-83)  kabinetsreactie-evaluatie-30-regeling

Application term 30%-ruling reduced to five years as of 2019

by

In the plans of the newly established Government a revision of the 30%-ruling legislation is taken up. The good news is that the 30%-ruling is not abolished as the ruling has been subject of recent political discussions of possible abolishment. However the application term of the ruling is planned to be reduced further. Click here for our latest update!… Read More

Fill in a tax return over the year of migration and – in most cases – receive a tax refund!

by

In most cases a tax and premium benefit can be achieved in the year of migration, either moving to or moving out of the Netherlands. As to the premiums this benefit follows from the fact that premium can be calculated on a time related basis.

This in practice means that per month no more premium can be due than 1/12 of the maximum annual premium. When the taxable income on annual basis is higher than appr. EUR 34,000, this time related method may well offer a benefit.

As to the tax part; employers calculate the wage tax due on annual basis and divide the outcome over 12 months. … Read More