Changes to the Expatriate tax regime (30% ruling)

Further to the major changes to the Expat tax regime as per 1 January 2012, this year fine tuning has been made. In the remainder we will discuss these two changes.

1. Amendments to the 150 kilometre rule

From 1 January 2012, the Expat tax regime was amended. One of these modifications was that in order to benefit from the Expat Tax regime one had to live at least 150 kilometres from the Dutch border (measured in a straight line) during at least 2/3 of the preceding 24 months prior to being hired from abroad.

This measure had an inadvertent effect in the situation that:

  • an employee was previously hired from abroad from a place further than 150 kilometres from the Dutch border; and
  • afterwards left his Dutch employment and went to live outside the Netherlands but within a distance of 150 kilometres from the Dutch border; and
  • would consequently return to the Netherlands.

This person would not be eligible for the 30% ruling, due to the fact that prior to being hired for the second time, he was living within 150 kilometres from the Dutch border.

This inadvertent effect has been resolved with retro-active effect through 1 January 2012; for these cases the 150 kilometre requirement has to be met for the initial hiring from abroad and not for any consequent hiring.

2. 30% ruling runs through until the end of the next salary period

With the 1 January 2012 changes to the Expat tax regime, it was not fully clear if payments received after leaving the Netherlands but within the duration of the 30% ruling would fall within the scope of the 30% ruling.

Clarity has now been provided that in order for payments to fall within the scope of the 30% ruling, these payments need to be made by the end of the next wage tax period after leaving the Netherlands. In most situations, that would imply that any back-pay should be paid no later than the month after leaving the Netherlands. These changes apply retro-actively through 1 January 2012.

Please contact your Baker Tilly advisor for additional information.