What is the 30% Facility?
The 30% facility in the Netherlands is a tax advantage for expatriate employees working in the country. Essentially, it allows 30% of an expat’s salary to be tax-free, under certain conditions. This facility is designed to cover extra costs, like relocation, that expats incur when moving to the Netherlands.
Changes Effective January 1, 2024
Introduction of a Wage Cap
A significant amendment to the 30% facility in the Netherlands is the introduction of a wage cap. From January 1, 2024, the facility will be capped at a salary of EUR 233,000. This means that only the portion of an expat’s salary up to this amount will be eligible for the 30% tax-free benefit. This cap will be subject to annual adjustments to account for economic changes.
Further Tightening of the 30% Facility in the Netherlands from 2024
This section will explain the amendment’s impact on the duration and percentage benefits of the 30% facility in the Netherlands. Starting from January 1, 2024, the duration of the 30% ruling will be limited to a maximum of five years. Additionally, the application of the 30% benefit itself will undergo a phased reduction – initially, 30% of the taxable salary remains tax-free for the first 20 months, then 20% for the next 20 months, and finally, 10% for the remaining period. This graduated reduction in the tax-free percentage will have significant financial implications for new employees eligible for the 30% facility.
Impact on Existing Expats Using the Facility
Employees who are already enjoying the benefits of the 30% ruling at the end of 2023 will fall under a special transition regulation. This means that the new changes won’t affect those who have started using the 30% facility before January 1, 2024. However, if the application of the 30% ruling is interrupted, this transition rule will no longer apply, underscoring the need for continuous eligibility to maintain the benefits under the old system.
If you want to know if you’re still eligible for the 30% ruling click here and contact us now.
What Does This Mean for Expats Considering Moving to the Netherlands?
Expats planning to move to the Netherlands should be aware of these changes to the 30% facility. It’s essential to understand how this amendment might affect their net income and budgeting. For high-earning expats, this change could mean a significant adjustment in their tax advantages.
Ready to optimize your financial strategy in light of the new 30% ruling in the Netherlands? Contact our team of experts for personalized advice and stay financially savvy in 2024 and beyond. Let’s ensure your move to the Netherlands is as smooth and beneficial as possible.