The Netherlands: ‘30 Percent’ Preferential Tax Treatment Restrictions Effective January 1, 2024

As a result of the Dutch Upper House voting for the 2024 Tax Plan, the restrictions on the ‘30 Percent’ preferential tax treatment for highly-skilled foreign workers will go into effect on January 1, 2024. Currently, under this rule eligible foreign nationals do not need to pay tax on up to 30 percent of their income for five years, but the applicable timeframes and percentages will be reduced over time. Employers are again reminded that transitional arrangements will apply to employees who already received compensation in the last period of 2023 for which these employees were able to apply the ‘30 percent’ rule. However, due to concerns from stakeholders, such as that it will be more difficult to attract talent in the Netherlands, the Dutch Upper House requested that the government come up with alternative solutions that would have a less damaging impact on the Dutch economy. These alternative solutions will depend on the new government, which needs to be formed following recent elections, and would impact the 2025 Tax Plan.