tax plan 2012 changes 30%-ruling

Changes to the 30% ruling

As announced by the State Secretary, the 30% rule will be modified. The changes are as follows:
• The specific expertise condition is to be fulfilled by a minimum salary;
• The applicable period for prior residence in the Netherlands will be extended;
• Definition of incoming employee;
• 30% facility for young PhD students.

The changes will take effect at January 1, 2012. It is expected that there will be adjustments to the proposed changes because of discriminatory elements.

The specific expertise condition is to be fulfilled by a minimum salary
The condition of specific expertise is now to be fulfilled by means of a standard salary. Specific expertise is considered present if a salary is equal to or above that standard. The amount of the minimum salary is connected to the income criterion for the knowledge migrant scheme. For 2011, this is 50,619 euro. For this condition the actual taxable salary is relevant, thus excluding the 30% ruling.

The condition that the specific expertise is scarce or absent in the Dutch labour market still applies and the employee must also fulfil this condition.

The applicable period for prior residence in the Netherlands will be extended
At the moment periods of prior residence in the Netherlands within the last 10 years are discounted from the term of the 30% ruling, if granted. Prior residence in the Netherlands of more than 15 years do not count towards the discount period. From 2012 the applicable period will be extended to 25 years. Periods of prior residence which commenced more than 25 years ago but ended within the last of 25 years will be discounted from the term of the 30% ruling.

Definition incoming employee
With the proposed changes there is a definition given of an incoming employee. An incoming employee is a person who lived at least 150 km away from the Dutch border before employment in the Netherlands commenced.

30% facility for young PhD students
PhD students who resided in the Netherlands prior to graduation can also apply for the 30% ruling. The period they stayed in the Netherlands for their study is not treated as prior residence in the Netherlands. There is also an minimum salary of 26,605 euro applicable. The other conditions of the 30% rule still apply.

The above applies not only to PhD students who graduated in the Netherlands but also to those who graduated abroad. An additional requirement is that employment in the Netherlands begins within one year after graduating for the PhD.

Mid-term review and change of employer
The tax office may request a person to prove that they still meet the requirements of 30% ruling from the sixth year. If the withholding agent has proved to the tax office that the person still meets the requirements of the 30% rule then the tax office can not inquire about this again.

The new rules will also apply to the mid-term reviews and changes of employer. If the interim review shows that the person does not fulfil the new criteria, the 30% rule will be withdrawn. This also applies to30%-rulings granted before the law change