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1. Enforcement moratorium will be terminated as of 1 January 2025
The enforcement moratorium under the DBA Act will be terminated as of 1 January 2025. This means that as of 1 January 2025, the Dutch tax authorities will actively enforce against pseudo self-employment. From this date, the Dutch tax authorities can impose correction obligations, additional tax assessments and fines. In cases where there is no malicious intent, the Dutch tax authorities cannot impose corrections further back than 1 January 2025.
Interested in finding out more? Read our newsletter about the termination of the enforcement moratorium.
N.B.: the termination of the enforcement moratorium was not announced on Dutch Budget Day 2024. Due to the practical relevance, we have included this topic in this newsletter as well. Hereafter, this newsletter only contains legislative proposals announced on Dutch Budget Day 2024.
2. Reversing the scaling back of the 30%-ruling and the introduction of the 27%-ruling
The 30%-ruling is a tax facility for foreign employees with specific expertise working in the Netherlands. Under this scheme, subject to conditions, employers can provide up to 30% of the employee’s capped salary up to the WNT-standard (WNT-norm) (Capped Wage) tax-free. The facility has been scaled back during the past years.
One of these measures concerns the gradual scaling back of the 30%-ruling to a 10%-ruling, which entered into force on 1 January 2024. As a result, for new applications as from 1 January 2024, the 30% tax-free allowance will only be provided in the first 20 months of the term. In the following 20 months, the maximum tax-free allowance will be 20% of the salary and in the last 20 months of the term, this percentage will drop to 10%.
The introduction of the scaling back of the 30%-ruling to a 10%-ruling evoked many reactions within the Dutch business community. In response to these reactions, the Ministry of Finance conducted a research on the 30%-ruling and the ET-scheme earlier this year. This research showed that the gradual scaling back of the 30%-ruling to a 10%-ruling has a negative effect on the Dutch business climate.
In the Cover Letter, the Dutch government announced that this gradual scaling back of the 30%-ruling will be reversed. For the years 2025 and 2026, the flat rate will be 30% of the Maximum Salary of all employees. As of 1 January 2027, the flat rate will be reduced to 27%. As a result, the 30%-ruling will become a 27%-ruling from that moment on. Transitional rules apply for incoming employees who have applied the 30%-ruling before 2024.
Moreover, the Dutch government announced that the regular salary criterion for the application of the 30%-ruling will be increased from € 46,107 to € 50,436 (amount to be indexed). The salary criterion for employees under the age of 30 with a qualifying master's degree will be increased proportionately. Transitional rules will also apply to the increase of the salary criterion.
The abolishment of the partial foreign taxpayer status, effective as of 1 January 2025, will proceed as planned. Additionally, the capping of the 30%-ruling to the Capped Wage, which entered into effect on 1 January 2024, will remain in effect.
3. Other tax changes relating to payroll taxes as of 1 January 2025
In the 2025 Tax Package, the government has also announced the following measures:
The proposals mentioned in this newsletter are to be discussed and adopted by the Dutch Parliament, and therefore are subject to changes before enacted into law.
Contact
After reading this newsletter, do you need further clarification on the potential consequences? Or are you interested in a no-obligation consultation? If so, please contact your Loyens & Loeff adviser or one of our tax advisers from our Employment & Benefits team. We will be happy to assist you.
