Changes for individuals
The main changes for individuals that were implemented into the Dutch (tax) legislation in the last few years are:
- As part of the COVID-19 tax measures the so-called ‘NOW-measure’ has been introduced in the Netherlands. This measure, which in Dutch is called ‘Tijdelijke noodmaatregel overbrugging ter behoud van werkgelegenheid’ (NOW), entails a compensation for labour costs for companies whose turnover has decreased by at least 20% due to the COVID-19 measures. The measure is extended until September 2021. The actual amount of the compensation depends on the extent of the company's turnover decrease and on the company's wage and salary bill
- If an employer based in the EU posts workers temporarily to the Netherlands, then those workers are entitled to the main terms and conditions of employment applicable in the Netherlands. This is regulated, in particular, in the Terms of Employment Posted Workers in the European Union Act (WagwEU). Employers based in the EU who temporarily post employees in the Netherlands are required, amongst other things, to file a notification via the Posted Workers online portal of the Ministry of Social Affairs and Employment prior to the start of the work. This obligation applies from 1 March 2020.
- As of 2021 18 to 35 year old first-time buyers on the housing market are eligible for a transfer tax exemption for houses under 400,000 euro. Buyers who don't plan to live in their home (investors) have to pay transfer tax of 8%.
- As of 1 January 2020, the Balance Employment Market Act (WAB) has entered into force, which introduces important legal changes for Dutch employers. Based on this Act, from 1 January 2020:
- employers will pay a low unemployment benefit contribution for employees with a permanent employment contract and a higher contribution for employees with a flexible contract (the difference is 5 percentage points);
- employers have to offer on-call employees who have been in their employ for 12 months or longer a fixed-hour contract
- payroll employees are entitled to at least the same working conditions as employees of the company they are seconded to, and
- a transition payment is mandatory whenever an employer terminates or fails to renew a temporary contract.
From 14 December 2019, with retroactive effect from 9 February 2017, a new ministerial degree entered into force as a consequence of case law from the European Court of Justice (ECJ). Based on this degree, non-resident taxpayers who live in a European Union (EU) country and earn their income almost entirely in two or more countries outside their home country, including the Netherlands, can claim pro rata personal deductions in the Netherlands.
If certain conditions are met, a foreign employee working in the Netherlands may be granted the so-called 30% ruling. Under this ruling, 30% of the income from active employment can be paid tax free. As of 2019, the maximum period of the 30% ruling is reduced to five years.
Tax status independent contractors
On 1 May 2016, the Declaration of Independent Contractor Status (VAR) was abolished. This has consequences for contractors who used to perform services in the Netherlands based on such a declaration, as well as for the entities who hire these contractors. The abolishment of the VAR means that organisations that work with contractors have to assess the relationship with their contractors to make sure the labour relationship does not qualify as an employment.
Currently, a tax status independent contractors transitional period applies, during which the Dutch tax authorities will only enforce legislation in organisations in case of evident and intentional false self-employment. As of 1 January 2020, however, the Tax Administration can also enforce legislation if organisations do not (or insufficiently) follow instructions from the Tax Administration with respect to their labour relationships with contractors, within a reasonable period of time.
The Dutch government is currently developing a web module for clients of contractors, the aim of which is to provide clients with certainty in advance that no payroll taxes need to be withheld and paid.
The use of the web module will not be mandatory; it is only a tool for clients and contractors to get (more) clarity about their working relationship. If the web module leads to a 'client statement', this gives the client the assurance that no payroll taxes need to be withheld, provided the questions have been answered truthfully and the contractor is working in accordance with this. The web module has not yet entered into force and the introduction of this tool is not yet certain.