Reduction of the duration of the 30%-ruling per January 1st, 2019

The maximum duration of the 30%-ruling for extraterritorial employees will be reduced from eight to five years, as of January 1st, 2019. The period during which the partial non-resident taxpayer status can be applied for by the employee, and the actual extraterritorial expenses can be reimbursed tax-free by the employer, will also be reduced to a maximum of five years.

The Dutch government announced their intention to shorten the 30%-ruling for incoming employees from eight to five years in its coalition agreement for 2017. Recently, the Dutch State Secretary for Finance announced that the 2019 Tax Plan (to be presented on Budget Day, September 18th 2018) will include a reduction of the duration of the 30%-ruling from eight to five years as of January 1st, 2019. This legislative change will also affect existing rulings. 

Employees entitled to the 30%-ruling have recently been informed in writing by the Dutch tax authorities regarding the fact that the duration of the 30%-ruling will be reduced, and have been referred to their employer for any questions regarding the reduction.

Transitional law

Transitional law was proposed on October 26th, 2018. Employees using the 30%-ruling on December 31st, 2018, will retain their original end-date until ultimately December 31st, 2020. In all cases, the maximum duration of 5 years will be applicable per January 1st, 2021.

  • Original end-date between 31-12-2018 and 31-12-2020: end-date unchanged.
  • Original end-date after 31-12-2020: duration reduced to maximum of 5 years.
  • Employment started after 31-12-2018: ruling is issued for a maximum of 5 years.

Exception for international schoolfees withdrawn

The previously proposed transitional law with regard to 2018-2019 schoolfees has been withdrawn.

Consequences of 30%-ruling ending

Depending on the stipulations of the individual labour agreement, the reduction of the duration will significantly affect either the net income of the employee or the gross wage expense of the employer. In both cases, the employer’s burden could increase and the employee will be faced with ‘full’ personal income taxation without the possibility to opt for treatment as partially non-resident taxpayer.

Additionally, in cases where the employer has agreed to reimburse the expenses of employee’s children’s international school fees, this will no longer be tax-free.

Assess labour agreements

Considering the impact the expected change will have to your employee’s income and tax status, it is important to pro-actively assess whether individual labour agreements or conditions require adjusting, to avoid discussion and unpleasant surprises once the 30%-ruling comes to an end.


In anticipation of the expected legislative changes, we strongly advise employers and employees to address the consequences and take action where required. We would be happy to assist you in this. In our webinar we have provided a further explanation of the consequences and possible solutions.  

For further information please contact senior manager tax advisory Johan Flohr or consultant tax advisory Thom Gunn