On May 20, 2022, the Dutch government published its spring budget report 2022. This report contains several tax proposals. In this article, BDO will give an overview of the two tax proposals relevant for expatriates in the Netherlands: the proposal concerning the 30% rule and the proposal concerning the maximum tax-free travel allowance.
Currently, the 30% ruling provides eligible expats with a tax-free maximum allowance of 30% of their total taxable salary. This non-taxable amount is considered to cover extraterritorial expenses (additional expenses caused by residing outside of one’s country of origin), regardless of the actual expenses incurred.
The spring 2022 budget report proposes to cap the 30% rule from 2024. This will be done by limiting the basis for calculating the tax allowance to the maximum remuneration of senior civil servants in the (semi-)public sector, also called such as the “WNT-standard” (216,000 euros in 2022 and indexed annually).
The spring 2022 budget report mentions that a transitional law will be introduced, leading to a gradual implementation of the cap, spread over a period of 3 years.
To demonstrate the possible impact of this proposal on the annual net salary, we have included a simplified example. Please note that this proposal has no impact on expatriates whose annual taxable salary including the 30% decision allowance is less than or equal to the “WNT standard”. The same applies to expatriates who have agreed on a net salary with their employer.
|Current situation: Uncapped (euros)||Proposed situation: Capped at €216,000* (euros)|
|Annual taxable salary incl. 30% decision allowance||250,000||250,000|
|Subtract: 30% Decision Allowance||75,000||64,800|
|Annual taxable salary excluding VAT decision allowance of 30%||175,000||185.200|
|Add: 30% Decision Allowance||75,000||64,800|
*The “WNT standard” for 2024 is not yet known, the example is based on the “WNT standard” for 2022.
**Example is based on tax/social security rates for 2022.
This example illustrates that on a taxable annual salary including the 30% rescript reduction of 250,000 euros, the limitation of the calculation base of the 30% rescript leads to a reduction of 5,000 euros in the net annual salary (172,000 euros minus 167,000 euros).
Under current Dutch tax law, the specific exemption for business travel expenses is capped at €0.19 per kilometer. As this maximum tax-free reimbursement of business travel expenses had not been indexed for some time, the parliament had already asked the Dutch government in 2019 to consider increasing this amount. The government first announced an increase in the maximum tax-free refund in its coalition agreement of January 10, 2022.
The increase would initially take effect on January 1, 2024. However, due to soaring fuel prices, Parliament has urged the government to bring this date forward. The Spring 2022 budget report includes the announcement that this date will be brought forward to January 1, 2023. Therefore, if this plan is executed accordingly, employers will be able to pay their employees a higher tax-free reimbursement per kilometer of travel. business from that date. Date.
The Spring 2022 budget report does not provide details on the exact amount(s) of the increase. During a debate in March 2022, the Secretary of State mentioned a gradual increase in the ceiling for tax-free reimbursement of business travel expenses, first to 0.21 euro per kilometer then to 0.23 euro. However, some patience regarding exact plans is still required.
The final proposals regarding capping the decision by 30% and increasing the maximum tax-free travel allowance will be included in the Tax Plan 2023, which will be officially published on “Prinsjesdag” on September 20, 2022. However, if you want to already want to consider the potential personal consequences for you, or if you have any further questions, please do not hesitate to contact BDO. They are happy to help you.