Dutch Budget 2018 – other tax and social security proposals

Posted on 11th January, 2018

Estimated reading time 2 minutes

Dutch Budget 2018 - other tax and social security proposals

The Dutch Government has announced its plans for the tax year 2019 and future years. We examine the issues most relevant to Dutch employers and their employees.

Transitional rules for imminent changes to Dutch expatriate regime, the “30% ruling”

The maximum term of the Dutch expat regime, the so-called “30%-ruling”, will be reduced from eight to five years as of 1 January 2019. However, the Dutch Government has announced that there will be transitional rules for the group of employees who - due to the proposed change - would lose the 30%-ruling in 2019 and 2020. For them, the 30%-ruling can be applied until the end of 2020 provided the term of validity of their 30%-ruling has not ended earlier. Also, in other existing situations the expiry date may be extended to 31 December, 2020.

Adjustments to tax bands and rates

Tax bands Proposed new rates for 2019
Up to EUR 20,384 36,65% (9 % tax + 27.65% national insurance)
EUR 20,384 – EUR 34,300 38,10% (10.45% tax + 27.65% national insurance)
EUR 34,300 – EUR 68,507 38,10% (tax only)
Over EUR 68,507 51,75 (tax only)

These bands represent slightly different tax rates compared with 2018. Also, adjustments to various tax credits were announced.

Who is impacted by these changes?

  • Employer and employees should both take note that employees hired from outside the Netherlands and qualifying for the Dutch expat regime can only benefit from the 30%-ruling for only a maximum of five years, instead of the previous eight year duration, if they arrive in the Netherlands after 1 January 2019.
  • Employees currently benefiting from the expat tax regime have to realise that also for them the maximum duration will be reduced except to the extent they benefit from the transitional rules explained above. This will impact their net salary and also on their personal income tax situation: they will have to report their income from investments from 1 January, 2021, whereas under the 30%-ruling they are (almost fully) exempted from paying tax on non-earned income.

What happens next?

The proposals are to be debated in the Dutch Parliament and, if passed, they will be implemented by the end of 2018, together with any amendments approved by parliament.

How can we help?

For further information or to discuss any of the issues raised, please contact Rina Driece (rina.driece@loyensloeff.com) on +31 10 224 6 424.