Dutch 30% tax ruling: from 8 to 5 years – update


In our Newsflash of 24 April 2018 we already referred to the announcement of the Dutch government that it will reduce the maximum duration of the 30% ruling, notably from 8 to 5 years. It is anticipated that this reduced application will be applicable as of January 2019 for both new and existing employment situations (without transitional measures).

On 25 May 2018, the Dutch State Secretary for Finance answered to certain parliamentary questions regarding the Dutch government’s proposal to reduce the maximum term of the 30% ruling from 8 to 5 years for both new and existing cases. More specifically, the question was raised whether the planned reduction to 5 years for existing cases is defendable from a legal point of view.

According to the Dutch State Secretary, this is the case. By way of justification, he stated that:

  • decisions to grant the 30% ruling usually contain an explicit reservation regarding future changes to rules and regulations; and
  • excluding cases from the reduction to 5 years would lead to a difference in treatment, which, considering the background to the reduction, would be hard to justify. However, the final decision regarding the legal defendability in individual cases rests with the courts.

Finally, the Dutch State Secretary stated that, in June 2018, the Dutch tax authorities would inform the affected employers and employees of the proposed changes by letter.