For employment tax, three changes are announced as intended to be proposed in the Budget 2023, in September 2022:
• a cap of the benefit of the 30%-ruling for expats;
• a raise of the tax-free reimbursement of travel expenses;
• a reduction of the effectiveness margin for the minimum attributable salary for
1. The 30%-ruling
Currently, the 30%-ruling offers expats a tax-free allowance to cover for extraterritorial expenses, incurred due to working for a Dutch wage tax withholding entity (employer). The 30%-allowance is calculated, based on the total Dutch taxable remuneration of the expat. The Government announces that it intends to introduce a maximum basis for the tax-free 30%-allowance, which maximum will be reduced over a period of three years to a cap of an annual amount of EUR 216,000 (the 2022 level of the Standards for Remuneration act).
We will be happy to be your soundboard when exploring alternatives and possibilities, for instance when you would like to hire new expats.
2. The travel allowance
The maximum of the tax-free travel allowance amounts to EUR 0.19 per kilometre. When travelling by public transport, the actual costs can be reimbursed tax-free. The Government already announced an increase of the travel allowance as per 1 January 2024. It is now considering an increase already as per 1 January 2023. The Spring Budget Report 2022 provides no details as to the exact amount of an increase. Earlier, the Second Chamber of Parliament had already urged the Government to increase the tax-free amount to EUR 0.23.
3. The required minimum salary for the major shareholder
For tax purposes, the amount of the remuneration for the work a major shareholder performs for his company (DGA) must meet certain criteria. One of these is that the remuneration should not be more than 25% less than, in short, would be fitting to a comparable employment and function. The Government intends to reduce this 25% margin to 15% as per 1 January 2023. In view of this, we advise to evaluate the amount of the remuneration in the course of 2022.
We would like to stress that the changes mentioned are intentions only; no Bill has been proposed to Parliament, yet. Based on what we know, that will take place no sooner than on Budget Day, in September this year. Until then, politics and society will, no doubt, react to the announced changes, possibly causing them to be amended before then.
Nevertheless, we would advise you to bear the Government’s intentions in mind and to closely monitor the developments. We will be glad to keep you informed.
Should you have any questions with respect to the above, please contact your trusted adviser or one of the tax advisers of our Employment & Benefits team.