Cuts to the 30% ruling postponed

30% ruling postponed
16/10/2018

Cuts to the 30% ruling postponed

The Dutch cabinet has decided to postpone the cuts to the 30% ruling for 2 years. The change to the 30% ruling is part of a new package to strengthen the Dutch business climate. The news of delaying the shortening of the 30% ruling follows the decision to uphold the dividend tax. The cabinet proposes to implement a transition period for the group whose 30% ruling benefits would have terminated in 2019 or 2020. This means that those receiving the tax benefit, who would have lost it in 2019 under the original plan, will continue to receive it until 2021, when the duration of the benefit will be cut to five years for all new and existing cases.

Protest

The proposed cut to the 30% ruling from 8 to 5 years without transition period has generated a lot of disturbance within the international community. Over 60.000 internationals are supposed to benefit from the 30% ruling. It would have been especially unfortunate for the thousands of people who were faced losing the benefit on January 2019. That is when the maximum  duration of the ruling would have been cut from 8 years to 5 without a transition period.

A wide coalition of employers, universities, international schools, relocators, regional development agencies, municipalities and government ministries protested against the proposed changes.

United Expats in the Netherlands, a collective of expats affected by the cuts to the 30% ruling, has said to continue their fight against the proposed changes. United Expats hired the legal firm Stibbe to examine the legality of the plan to cut the 30% ruling without transition period from 8 to 5 years per 2019. The lawyers from Stibbe state that cutting the 30% ruling without transition period is a violation of Dutch law and contradicts the principles of predictability, proportionality and legal certainty.

The 30% ruling

The 30% ruling is a tax reimbursement scheme designed to compensate the expenses foreign employees make, due to temporary residence in the Netherlands (extraterritorial costs), such as housing, travel costs, childcare or international education. It enables those who meet the requirements to receive 30% of their wages tax-free. Read more in our section on the 30% ruling.