30%-allowance or reimbursement of the actual extraterritorial costs

Under the existing 30% regime, instead of applying the 30% ruling, employers and employees can opt for untaxed reimbursement of the extraterritorial costs actually incurred. No specific conditions apply to making the choice, except, of course, meeting the wage tax conditions applicable to such a reimbursement/allowance.

Starting 1 January 2023 this choice must be made per calendar year. The choice must be made by the employer. This obligation is introduced as a measure to make ‘cherry picking’ impossible during the calendar year for employers and employees, should the 30% allowance need to be capped due to the other proposed change of the 30% regime (please see below).

The choice must be made in the first salary period of the calendar year. For employees starting their employment on or after 1 January of the relevant calendar year, the choice must be made in the first salary period following the four months submission period which applies for the 30% ruling.

The tax-free 30%-allowance will be capped. Secure the entitlement to transitional law

The Tax Plan 2023 proposes a cap on the base for the computation of the 30% allowance. This capping measure will take effect from 1 January 2024. This cap will be set at the maximum remuneration under the Top Income Standardisation Act, in Dutch generally referred to as the “WNT”. For 2022, this maximum is EUR 216,000. The maximum remuneration under the WNT is expected to be higher in 2024, as this amount is linked to the development of contractual wage costs for the government.

Transitional law

As regards employees for whom a 30% ruling has been applied in the last salary payment period of 2022, the capping measure will only take effect as of 1 January 2026.

Substantial increase cap on contributable income for employer social security contributions

A substantial increase in the cap on the contributable income for the employer’s social security contributions and the employer's contribution under the Healthcare Act has been announced: from EUR 59,706 to EUR 66,952. The increase in employer contributions can amount to approximately EUR 1,800 per employee.

Increase tax-free allowance for working at home

The tax-free allowance for working at home (gerichte vrijstelling) will be increased to EUR 2.15 (2022: EUR 2.00) per day, as of 2023.

Further increase tax-free budget under the work-related costs scheme (werkkostenregeling)

For the year 2023 the tax-free budget under the work-related costs scheme will be increased to 3.00% of the taxable wage bill up to and including EUR 400,000 (proposed earlier: EUR 1.92%; 2022: 1.7%). For the excess over a taxable wage bill of EUR 400,000, the percentage of 1.18% will remain unchanged.

Interest on loans to personnel may be included in the tax-free budget under the work-related costs scheme

Based on the Wage Tax Newsletter 2023 of the DTA (version 14 November 2022), the employer can use the (increased) tax-free budget of 2023 for the interest benefit that the employee has on an interest-free loan from the employer. It will also be possible to use the (increased) tax-free budget for a (partial) waiver of the loan. To be able to use this possibility, the employer must designate the taxable benefit as final levy income under the work-related costs scheme. The tax facility also applies to loans taken out before 2023.
The Newsletter refers to the regular wage tax rules as published in the Handboek Loonheffingen (paragraphs 4.2 and 22.2.5) which seems to suggest that the so-called ‘common practice test’ (gebruikelijkheidstoets) should be applied. This makes it necessary to check the actual possibilities under this test, from case to case.

Other wage tax changes

For certain other wage tax changes anticipated per 1 January 2023, we kindly refer to our Newsletter Dutch Budget Day 2022: amendments with respect to employment taxes. Dutch Budget Day 2022: amendments with respect to employment taxes | Loyens & Loeff (loyensloeff.com)

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.