Budget Day 2024: measures for employees and employers

Expatriate ruling decreased to 27%

Expats can, under certain conditions, receive a tax-free allowance of up to 30% of their salary for a maximum of five years. Due to a previous legislative change, this 30% scheme was set to transition into a 30-20-10% scheme (phased reduction). However, this earlier change is being reversed, and all incoming employees will have a 30% allowance in 2024 and 2025. Starting January 1, 2027, the percentage will be reduced to 27%.

The salary threshold will be raised from € 46,107 to € 50,436 (2024 amounts; higher indexed amounts will apply in 2027), based on the salary standard for a residence permit as a knowledge migrant. For employees under 30 with a master's degree, the salary threshold will increase from € 35,048 to € 38,338 (2024).

For expats who applied the 30% scheme before 2024, transitional rules apply. They will continue to benefit from the 30% rate and the old (indexed) salary norms until the end of their period under the scheme.

Wage tax for employees of public law legal entities abroad

Due to certain adjustments, the wage tax will also apply to wages of employees of Dutch legal entities under public law that work entirely abroad but are subject to Dutch income taxes (income tax and national insurance contributions). In tax treaties, the taxation of these wages is often assigned to the country where the public law entity is established. In the income tax, the regulation is already well in line with the treaties. However, the wage tax still contains references to an employment with “the State of the Netherlands”. This will be repaired. 

Clarification of tax contribution limit

The calculation rules for the fiscal premium limit will be adjusted so that they align with the latest scenario set from De Nederlandsche Bank. The net real return expectation that is used for calculating the fiscal premium limit will be reduced from 100 to 60 years. The amendment will retroactively apply from October 1, 2024. 

Clarification of targeted exemption for public transport subscriptions

The extension of the targeted exemption for public transport subscriptions, which was introduced in 2024, will be clarified. If an employer gives its employee the option to travel free or at a discount at the expense of the employer, the costs will fall under the targeted exemption. This is the case if the employee also uses the public transport card (to whatever extent) for business travel (including commuting). The targeted exemption therefore also applies to private trips made with, for example, a public transport card from the employer (or otherwise entitled to a discount from the employer). Also, in the targeted exemption, the distinction between Dutch public transportation and other public transportation will be eliminated.

Adjustment of final levy on company vehicles

The lump sum to pay off the additional tax for private use of a company vehicle that is used alternately by several employees (€ 300 per year) is adjusted for inflation. From 2025, the fixed amount will be set at € 438 per year and will be indexed annually.

In addition, the definitions of the terms ‘passenger car’ and ‘company vehicle’ in the wage tax will be aligned with the definitions in the BPM in 2027. Due to changes in the BPM, more cars will qualify as company vehicles.

Extension of tax liability for seafarers

In cases where an employment relationship is performed entirely outside the Netherlands, but the right to tax has been granted exclusively to the Netherlands in tax treaties, a measure is introduced that allows the Netherlands to implement the right to tax. This will close the tax gap for seafarers living in Belgium.

Adjustment of income tax for home working days fort he Netherlands - Germany

Some adjustments are being made to income tax to ensure that the Netherlands can levy income tax on home working days that have been allocated to the Netherlands under international agreements. At the moment, Netherlands is negotiating with Germany on the possibility to allow certain amount of day to work from home without shifting of taxing right to the country of residence agreements relate to the tax treaty between the Netherlands and Germany.

Relaxation of value transfer of pensions within EU/EEA

Following two rulings of the European Court of Justice on the value transfer of pensions in the event of a cross-border change of employer, the conditions for a tax-free value transfer are being changed. As a result, it is no longer required for a cross-border value transfer within the EU/EEA that (i) there are no wider buy-out options abroad than in the Netherlands (redemption ban) and/or (ii) that the foreign pension provider must conclude an agreement with the Dutch Tax Authorities to accept liability for the tax and adjustment interest due.