2019 Budget Plan: what happens to the 30% ruling?

As part of the 2019 Budget Plan, the dividend-tax-withholding proposal and the 30% ruling issue were discussed in government committee in early October. The 30% ruling issue became embroiled in the dividend tax discussion and the subsequent commotion, but the result was it was decided to withdraw the proposal to reduce the duration of the 30% ruling to five years from eight years. Based on our understanding on October 9, the whole proposal was now off the table. What exactly happens to the 30% ruling in 2019? Read more in our blog.

30% ruling

The general public perception was that a reduction to five years was reasonable given that 80% of the beneficiaries leave the country within that length of time and a five-year period was more in line with the duration period of expat regimes in other countries. The sticking point was the hardship caused by imposing new rules on existing cases.

Then, on October 15, it was announced that the plan to reduce the 30% ruling duration period from eight to five years from 1 January 2019 will remain in place, but there will be a transitional arrangement made for current beneficiaries of the 30% ruling for the years 2019 and 2020.

The good news is that there will be no sudden loss for a) employees who would have lost it immediately as of 1 January 2019 – who have had it for five years – or b) those whose eight- or ten-year-duration period would lapse before 2021.

The bad news is that employees whose duration period on 1 January 2021 is longer than five years will lose it before they expected to and they will not enjoy the benefit for the full eight years.

what happens to the 30% ruling

What to do as a result

 We advise employers to inform their employees who currently have or will get the 30% ruling about the latest developments and make them aware that the Dutch tax rules are subject to changes that are not always foreseeable or predictable and that they should plan accordingly. The issue has become politicized so there may be turbulence ahead.

We understand how frustrating this can be, and we encourage you to get proper advice. We will be glad to help you, and if you require a specialist, we can introduce you to one in our network.

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Karin Otten, Karin Otten