Employment Tax
Netherlands | New Year’s update 2024
As we head into the new calendar year, employers in the Netherlands face several transformative changes in tax, immigration, and social security. In this publication we provide a brief overview of the main changes that employers should be aware of, so they can take timely action as they set out new strategic priorities for 2024.
Tax
New changes to the 30% ruling came into effect on 1 January 2024.
Adjustment of maximum tax-free allowance
The 30% ruling is now a 30 / 20 / 10% ruling (subject to transitional law). For the first 20 months, the tax free percentage will remain 30%. For the second 20 months, this will be maximally 20%. In the last 20 months, the maximum tax free percentage will be 10%. The maximum duration of the 30% ruling remains to be five years.
Transitional law is included for individuals for whom the 30% ruling is applied in the last wage tax period of 2023 (usually December 2023). For these individuals, the maximum tax free percentage remains 30% of the Dutch taxable wage during the period the 30% ruling has been granted by the Dutch tax authorities.
Abolishment of the partial non-resident taxpayer regime
The so-called partial non-resident taxpayer regime will be abolished as of 1 January 2025 (subject to transitional law). Under the partial non-resident taxpayer regime, holders of the 30% ruling are effectively exempt from Box 2 and Box 3 taxation (limited exceptions apply). The abolishment means that holders of the 30% ruling will no longer (almost completely) be exempt from paying taxes in Box 2 (substantial shareholding) and Box 3 (savings and investments) but instead become taxable in the Netherlands over their worldwide income (if they can be regarded as a Dutch tax resident).
Transitional law is included for individuals for whom the 30% ruling is applied in the last wage tax period of 2023 (usually December 2023). For these individuals, the abolishment of the partial non resident taxpayer regime will apply as of 1 January 2027, instead of 1 January 2025.
Salary Cap
In addition to the above, effective 1 January 2024 the maximum salary eligible for the 30% ruling is capped at €233,000 per annum (subject to separate transitional rules), i.e. a maximum tax free amount of €69,900 (233,000 x 30%) can be provided on an annual basis. For the portion of the income exceeding this threshold, no 30% ruling tax free allowance can be provided. This legislative change was already approved in 2022, with transitional law up to 31 December 2025 for individuals for whom the 30% ruling is applied in the last wage tax period of 2022 (usually December 2022).
Future developments
During 2024, the 30% ruling and the recent changes will be further evaluated. In the 2025 Tax Plan, depending on the outcome of the evaluation, it could be that the changes will be (partially) withdrawn, updated or that further changes will be announced.
Immigration
Adjustments gross salary threshold as of 1 January 2024
Indexed gross salary thresholds apply when businesses apply for Highly Skilled Migrant and labour migrant work permits and residence permits. The new gross monthly salary thresholds, excluding 8% holiday pay, that apply from 1 January 2024 are:
The above age-based salary thresholds will also be used as the benchmark for residence permit applications under the ICT Directive. Furthermore, the gross monthly threshold excluding holiday pay for an EU Blue Card will be EUR 6,245.
For work permits in the national Intra-Company Transfer category (outside the scope of the ICT Directive) the threshold for Highly Skilled Migrants of 30 years of age or older will apply for key personnel and the threshold for Highly Skilled Migrants younger than 30 years of age will apply for trainees.
EU Blue Card (Recast EU Directive)
The Dutch government has delayed the implementation of the recast EU Blue Card Directive until at least April 2024.
The new Directive will have an effect on the existing immigration rules for highly skilled third country nationals who wish to make use of the EU Blue Card Directive. Notable changes include a shorter minimum duration for employment contracts and exemptions for IT professionals from the education qualification requirement. Until the Dutch government enacts legislation implementing the recast Directive, the Dutch Immigration and Naturalisation Service (IND) has temporarily amended some practical processes and requirements for EU Blue Card applications in order to limit divergence from the recast Directive.
The next phase of the Dutch general election
Following the Dutch general election on 22 November 2023, the four parties who emerged as winners of the general election, PVV, NSC, VVD and BBB, are currently in coalition talks led by informateur Ronald Plasterk. This phase of the talks is anticipated to last until mid-February 2024 and covers the following policy areas:
Until a new coalition has been formed, with agreed common policies in the areas mentioned above, no significant changes are expected in respect of corporate immigration legislation or policy. Whether and how the policies of a new government will impact corporate immigration remains to be seen. However it is possible that current policy will be subject to significant change depending on the outcome of coalition talks.
Migration Advisory Council Publishes Report on Labour Migration
The Dutch Migration Advisory Council is an independent body that issues advisory reports for the Dutch legislature in relation to migration policy. In its most recent report of 11 December 2023, it emphasised the positive impact of strategic labour migration on the long-term demographic and social outlook of the Netherlands. The report also advocates for selective labour migration, focusing on highly skilled and essential sectors, as a valuable contributor to addressing future challenges.
The report’s impact on political discussions following the Dutch General Election remains uncertain but provides valuable insights for future policy considerations.
Social Security
The Framework Agreement for Telework entered into force on 1 July 2023. Based on this agreement, cross-border teleworkers within the EU can work from home up to (not including) 50% of their working time before shifting social security coverage to their home country. For 2024, an important deadline for employers to consider is the deadline to obtain an A1-statement with retroactive effect. This deadline is 30 June 2024.
For reference, employees can continue social security coverage in the country of their employer whilst teleworking in their home country under the following conditions:
The Framework Agreement will not be applicable all over the EU, EEA and Switzerland, since Member States actively need to opt-in to participate in the agreement. For the latest overview of the countries who have opted-in, we refer to this website .
As mentioned, it is required to apply for an A1-statement confirming the social security position in order to apply the rules of the Framework Agreement. This A1-statement should be applied for in the country where the employer is vested (and whose social security scheme will apply).
For the first 12 months (the period between 1 July 2023 – 30 June 2024), an A1-statement can be applied for with retroactive effect as of 1 July 2023, as long as the criteria of the Framework Agreement are met and social security contributions have been paid in the employer country for the period for which the retroactive A1 is applied for.
What this means for employers
Considering the upcoming deadline for retroactive A1-applications of 30 June 2024, it will be relevant for employers to follow up on the following (if not already done):
Contact us
Vialto will continue to monitor developments and the possible impact for businesses and employees. In the meantime we advise businesses to familiarise themselves with these changes and ensure timely action is taken from a strategic and policy perspective to ensure full compliance.
For further details on the above, please reach out to your usual Vialto Partners contact or alternatively contact:
Niek Schipper
Partner
Hugo Vijge
Director
Cecile de Rooij
Manager Social Security
Daan Hajer
Manager Tax
Nini Braken-Zheng
Senior Associate Immigration
Marijan Vrhovac
Senior Associate Immigration
Further information on Vialto Partners can be found on our website: www.vialtopartners.com
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