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Written by:
Bas Hollenberg


Definition 30% ruling

Definition of incoming employee retroactively expanded
Under the changes to the 30%-ruling which came into effect in 2012 employees must have lived at least 150km beyond the Dutch border during a specified period prior to employment in the Netherlands. Some undesirable consequences were encountered with insisting on this strict period. To counteract this, an exception has been included in the Implementation Decree Payroll Tax (Uitvoeringsbesluit LB) with retroactive effect.

Under the current rules a foreign worker can only utilize the 30% scheme if they lived more than 150km beyond the Dutch border for more than two thirds of the 24 months prior to employment in the Netherlands.

In early July 2012 a tax adviser was in a situation in which this limitation led to undesirable consequences. It involved an employee who was eligible for the 30%-ruling under the rules which applied up until 2012, but who returned to his homeland in 2011. He was employed to work in the Netherlands again in 2012, but because he lived in another country he required a new work permit and he did not come under the transitional arrangement for incoming employees. The current requirement regarding the 24 months prior to employment in the Netherlands meant that he was no longer considered an incoming employee and was not eligible for the 30%-ruling.

For this situation a solution has been found and a new fourth paragraph has been added to the Implementation decree which includes an exception that has retroactive effect up to and including January 1, 2012. The condition that an incoming employee must have lived at least 16 months of the previous 24 months more than 150km from the Dutch border does not apply if the employee returns to the Netherlands from a period in their homeland after earlier employment in the Netherlands, provided that the prior employment was commenced no longer than 8 years ago.

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