This tax guide by J.C. Suurmond & zn. Tax Consultants is here to make sure that you are up to date with the changes to tax rules coming in 2024, and know how to gain maximum tax benefits!
The circumstances can be hard if you are an expat, living in a foreign country where different, unknown rules apply. Your tax situation, for example, can prove to be a great deal more complicated than you would have expected. With the high inflation rates and a new cabinet of the government, it is worth the extra effort to be on top of your tax situation as an expat in the Netherlands.
Did your 30% ruling end in 2023?
Did your 30% ruling end in 2023? You are now regularly taxable in the Netherlands - this also includes your worldwide assets (box 3 tax), so don’t forget to declare these in your annual tax return!
Box 3 tax developments
For box 3 taxes, there are a few changes in 2024 to be aware of. Under the box 3 system, your savings, other assets and debt categories each have their own hypothetical rate of return based on their value at the beginning of the year, and are taxed on that return. This hypothetical rate of return is based on the actual rate of return for savings or investments and is much lower, for instance, for savings than for investments or other assets.
Any return you make is offset by any debts you hold, and is also reduced by the tax-free allowance. In 2024 the tax-free limit will remain the same as in 2023 - €57.000 for individuals or €114.000 for tax partners filing jointly. The total value of your return is then multiplied by the tax rate for box 3, which in 2023 will be increased to 36% (up from 32% in 2023).
In September 2023, the State Secretary of Finance, Marnix van Rij, published a proposal for a new box 3 system that will take effect from 2027 onwards. According to this outline, assets in box 3 will be taxed as in a capital gains system. Under this system, realised and unrealised income from assets is taxed and related costs are deductible. Real estate and shares in family businesses and start-ups would be exempt from the capital gains tax up until their value is realised (i.e. if and when they are sold).
The submission of this draft bill will be left to a new cabinet in the government, which means that the proposal can still be amended. Every system has its drawbacks, however, and there is still much uncertainty about the new tax system. This may further delay the planned effective date of January 1, 2027.
A qualified tax advisor can inform you about box 3 developments and give you advice on what actions are or aren’t possible in your situation.
Limitation of 30% ruling for high wage earners
The 30% ruling for incoming employees will also be capped again in 2024. Under the rules, employees can benefit from the ruling up to a maximum income threshold known as the WNT norm or Balkenende norm. In 2023 this limit was €223.000 per year, and from January 1, 2024, the threshold will rise to €233.000 per year.
This means that a maximum of 30% of €233.000 of an employee's salary can be made tax-free in 2024 (the equivalent of €69.900 in tax relief). Any salary they receive above this threshold will not benefit from the ruling.
Further limitations of the 30% ruling
Before the Dutch election, the parliament initiated two amendments to the 2024 tax plan that further restricted the 30% ruling. One amendment relates to the partial non-domestic tax liability for new beneficiaries of the 30% ruling scheme. This will no longer be applicable from 2024 onwards. Transitional regulations apply to those already benefiting from the 30% ruling, allowing partial non-domestic tax liability to continue through to 2026.
Furthermore, the benefit percentage on income will be phased out. From January 1, 2024, 30% of the salary will remain tax-free for the first 20 months. For the following 20 months after that, a percentage of 20% will be tax-free - and for the 20 months thereafter, the percentage will be 10%.
For people who already benefit from the 30% ruling as of January 1, 2024, the old scheme will remain in force for the entire duration.
Request a provisional assessment on time
Do you expect to pay taxes for 2023 or 2024? If you request a provisional assessment in time, you can save on tax interest. You need to request the provisional assessment six months after the end of the calendar year (July 1, 2024). After that, you will pay tax interest of at least 7,5% percent.
To ensure that the assessment is raised in time, it is recommended that you apply for it before April 1, 2024. The assessment for the 2023 tax year must be paid at once. You may pay the 2024 tax year assessment in instalments.
Bundle your deductible expenses into one year
If possible, bundle deductible expenses such as medical expenses and donations into one specific year. A deduction is consequently achieved earlier as the threshold is only deducted once from the expenses. For donations, the threshold disappears completely if you donate to a charitable institution for five years.
Lennart Suurmond is a tax advisor at J.C. Suurmond & zn. Tax Consultants. Need advice on the best way to file your 2023 tax return or do you need proactive tax advice for the coming years? Contact them to explain your situation.