As from 2019 the 30% ruling can only be used for five years. From January 1, 2024,
the 30% ruling can be applied up to a maximum of the so-called WNT standard (2024: € 233,000). This means that from 2024 a maximum of € 69,900 can be reimbursed tax-free.
In addition, the 30% ruling as we know it now, whereby up to 30% of the taxable salary remains untaxed, can only be applied in this way for the first 20 months. After the first 20 months, up to 20% remains untaxed and after another 20 months up to 10%. This can have major financial consequences for new employees for whom the 30% ruling can be applied. For a 30% settlement decision with a shorter term than 60 months, the same percentages and periods apply.
A transitional arrangement applies to employees who receive a reimbursement in the last period of 2023 for which these employees were in possession of the 30% ruling. The 30%-20%-10% phasing out has no impact on expats who already used the 30% ruling before January 1, 2024. If the application of the 30% ruling is terminated in the meantime, the transitional arrangement no longer applies.
Instead of applying the 30% ruling, it is possible to opt to reimburse the actual extraterritorial costs incurred (ET costs). The employer must be able to demonstrate these costs. The costs must also be recorded per employee in the payroll administration. Reimbursing actual ET costs may be a suitable alternative for future expats who have higher ET costs than the 30% reimbursement. The choice to apply the actual compensation or the 30% reimbursement must be made for a calendar year, with the exception of the first four months of the first year of employment.
It is clear that the changes must be monitored accurately and timely on an employee individual level. For questions and advice you can seek professional help at one of our offices.
Author: Leo Oudshoorn, leooudshoorn@wecountancy.com -
Wecountancy Expat Services, Noordwijk, Gouda, Hoofddorp.