Shortening of term of 30% facility and transitional law

28 December 2018 – On 18 December 2018, the Senate approved the 2019 Tax Plan. Among other things, this includes a shortening of the (maximum) term of the 30% facility from eight to five years. For existing users, their current term will only be shortened as from 1 January 2021, unless it expires earlier.

What will change?

Until 1 January 2019, the maximum term of a 30% facility was eight years. As from 1 January 2019, the maximum term of a 30% facility will be no more than five years. Pursuant to transitional law, the shortening of the maximum term will only apply with effect from 1 January 2021 for existing users.

Transitional law also applies to the possibility of opting for partial non-resident tax liability. As residents of the Netherlands for tax purposes, employees whose 30% facility expires will from that time onwards also have to pay income tax on their assets in box 3.

What are the consequences for existing users?

Employees who currently use the 30% facility can be divided into three groups:

The end date of the facility is in 2019 or 2020

The 30% facility will continue to apply for these employees until the current end date of the facility, until 31 December 2020 at the latest.

The end date of the facility is in 2021, 2022 or 2023

Depending on the end date of the facility, the term will be shortened by up to three years. The 30% facility can continue to apply for these employees until 31 December 2020 at the latest.

The end date of the facility is in 2024 or later

The term of these facilities will be shortened by three years. For this group of employees, this means that the 30% facility could end as of 1 January 2021. This group of employees will not benefit from any transitional arrangements.

Actions to be taken by employers:

  • Ascertain when the 30% facilities will end.
  • Find out what has been provided in the employment contract (which party will bear the disadvantage for tax purposes).
  • Analyse possible alternatives for tax-free allowances.

Actions to be taken by employees:

  • Ask the employer about the consequences of losing the 30% facility for the net wage.
  • Ascertain the consequences of the (early) end of the 30% facility for the income tax payable on box 3 income.

Would you like to know more?

If you want to find out more about the consequences and the options in your situation, you can contact Alexander Rasink by email or by phone on +31 (0)88 277 16 15. He will be happy to assist.

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