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  • Tag Archive: Netherlands tax

    1. Netherlands revamps tax incentives for expatriate employees

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      Netherlands expatriate employees – Introduction

      The Dutch tax landscape is undergoing significant changes, particularly concerning the ‘30%-facility’ for expatriate employees and the partial non-resident Dutch tax regime.

      These revisions, effective from 1 January 2024, are reshaping the financial outlook for expatriates in the Netherlands.

      Transforming the 30% facility

      The ‘30%-facility’ is a notable tax incentive for employees seconded or hired from abroad to work in the Netherlands.

      Previously, eligible employees enjoyed a tax exemption on up to 30% of their income for a maximum of five years.

      From 1 January 2024, the facility is undergoing a phased transformation.

      Initially, for 20 months, the tax-free allowance remains at 30%.

      Subsequently, it reduces to 20% for the next 20 months and finally drops to 10% for the last 20 months.

      Transitional arrangements

      Transitional arrangements benefit employees already under this regime as of December 2023, including those who began working in the Netherlands before the year-end.

      This provides some continuity amid these sweeping changes.

      End of the partial non-resident Dutch tax regime

      The partial non-resident Dutch tax status, an option under the 30% ruling, allowed expatriates to avoid Dutch tax on non-Dutch source income.

      However, from 1 January 2025, this benefit will cease to exist.

      Those granted the 30% ruling by 31 December 2023 can still enjoy this status until the end of 2026, thanks to transitional provisions.

      Cap on the 30% facility and actual expenses

      Another significant change is the introduction of a cap on the 30%-facility, effective from 1 January 2024.

      The tax-free allowance is now limited to 30% of the ‘WNT-standard’—a standard linked to top salaries, which is €233,000 for 2024.

      For employees granted the 30% ruling in December 2023, this cap will be delayed until 1 January 2026.

      Post the revision, as the tax-free allowance shrinks, considering reimbursement of extraterritorial expenses beyond the capped amount might be more beneficial than relying solely on the 30%-facility.

      Adapting to the new framework

      These changes necessitate a thorough review of compensation packages for expatriate employees.

      It’s essential for employers and expatriates alike to understand these evolving rules to optimize tax benefits and ensure compliance with Dutch tax laws.

      Netherlands expatriate employees – Conclusion

      While the Netherlands continues to attract global talent, the revised tax regime calls for proactive planning and adaptation to the new fiscal environment. 

      Final thoughts

      If you have any queries about this article on Netherlands expatriate employees, or Dutch tax matters in general, then please get in touch.

    2. Dutch 2024 Tax Package

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      Dutch 2024 Tax Package – Introduction

      On 19 December 2023,  the Upper House of the Dutch parliament approved the 2024 Tax Package.

      This included the Tax Plan and various other proposals, set to be effective from 1 January 2024.

      This approval, coming exactly three months post-publication, marks a pivotal step in the Netherlands’ fiscal policy.

      However, it’s noteworthy that the Industry and Electricity Tax Climate Measures Act was not adopted. 

      What is included in the Dutch 2024 Tax Package?

      End of Tax Relief for Share Redemption / Rate Increases

      The tax relief for share redemption for listed companies will be abolished from 1 January 2025.

      This change significantly alters the dynamics of share redemptions, impacting both companies and shareholders.

      The statutory minimum wage is set to rise by 1.2%, prompting an increase in certain tax rates.

      Notably, the top rate in box 2 will go up from 31% to 33%, and Box 3 tax rate to 36% from 2024.

      Modifications to the 30% Payroll Tax Scheme

      The scope of this scheme will be limited to EUR 216,000. Over the five-year period, the applicable rate will gradually decrease from 30% to 10%.

      The partial foreign taxpayer status for expats using the 30% ruling will be abolished, with transitional rules in place until the end of 2026.

      Amendments in Tax Classification for Dutch and Foreign Entities

      Changes include provisions for open limited partnerships facing withholding tax obligations due to hybrid provisions in the Conditional Withholding Tax Act 2021.

      Detailed guidance on classification tests and comparisons to Dutch entities is expected in Q1 of 2024.

      Updates to the Minimum Tax Act 2024 (Pillar Two)

      These amendments incorporate elements from the OECD’s model rules, including definitions and safe harbor rules.

      Restriction of RETT Concurrence Exemption for Share Deals

      This exemption will be limited from 1 January 2025, with transitional rules respecting certain agreements signed before 19 September 2023.

      National Implementation of Public Country by Country Reporting (CbCR) Directive

      The Netherlands has adopted the EU Directive for transparency in profit tax reporting, affecting multinational groups with revenues exceeding EUR 750 million.

      The reporting obligation starts for financial years commencing on or after June 22, 2024.

      Dutch 2024 Tax Package – Conclusion

      The 2024 Tax Package represents a notable change in the Dutch fiscal regime, aiming for greater transparency and adjustment to global economic shifts.

      While some of these changes, like the abolition of tax relief for share redemption and the amended 30% payroll tax scheme, bring about substantial shifts in tax strategies for businesses and individuals, the overall approach is geared towards a more equitable and transparent tax system.

      Entities that affected by these changes should carefully assess the impact and prepare for the administrative requirements imposed by the new regulations.

       

      Final thoughts

      If you have any thoughts on the Dutch 2024 Tax Pacakge, or Netherlands taxation at all, then please get in touch.