Reduction of 30% ruling duration deferred for existing cases

By Willem Bongaerts, Daan Roosdorp


Grandfathering rules will be implemented for the reduction of the maximum duration of the 30% ruling from 8 to 5 years. The grandfathering rules will apply to employees currently working under a 30%-ruling. State Secretary for Finance Menno Snel announced this change of plans in his letter on the government's newly proposed measures for the strengthening of the Dutch investment climate.

The Dutch government had already decided to reduce the maximum applicable period for the 30%-ruling facility from 8 to 5 years in the 2017 coalition agreement. Earlier this year, Snel announced that this measure would be applied to both new and existing cases, and that the 30%-ruling would expire on January 1, 2019 for all employees working under such a ruling for five years or more as of that date.

On Monday, it was announced that grandfathering rules for existing would be implemented after all. Although the details of the grandfathering rules have not been published yet, the rules will affect cases otherwise ending in 2019 or 2020. This could potentially mean that the reduction of the duration to 5 years will not enter into effect until January 1, 2021. In that case, nothing would change for employees working under a 30%-ruling for less than 3 years as of January 1, 2019 – the maximum duration of 5 years will still apply to this group. However, for employees working under a 30%-ruling for more than 3 years as of January 1, 2019, the ruling may be continued until the end of the original duration of 8 years, or until the end of 2020 (whichever takes place first).

The grandfathering rules are a part of the new package for the improvement of the Dutch investment climate, and will be financed through government funds available due to the reconsideration of the abolition of the Dutch dividend withholding tax. The package also includes other measures, such as:

  • Further reduction of the Dutch corporate income tax rate to 15%-20.5%
  • Reduction of the employer's levies
  • Increase to the WBSO R&D facility benefit