Netherlands

Remuneration of board members of a foreign company

As of 1 January 2023, the Dutch tax treatment of foreign remuneration of board members (‘directeuren en commissarissen’) of foreign-based companies has changed. The approval to avoid international double taxation on executive and supervisory board remuneration by using the exemption method instead of the credit method will expire. This means that the Netherlands will only provide an exemption for this type of income if the exemption method has specifically been agreed in the bilateral tax treaty.

Employment relationship

The Dutch Supreme Court ruled that all the circumstances of the case must be looked at to determine whether an agreement should be considered an employment contract. If one or more conditions for an employment relationship (i.e. work, salary, authority) are specifically breached in some respects, this is not sufficient to exclude an employment relationship. In October 2023, the bill clarifying the assessment of employment relationships and legal presumption was offered for Internet consultation. This consultation is a concrete follow-up to the clarification of the authority criterion and introduction of a legal presumption that was previously announced in a progress letter. The legislator also clearly takes into account the previous judgment of the Supreme Court about bicycle couriers being in an employment relationship. As of 2025, the Dutch tax authorities will check again more strictly whether an employment relationship exists. 

Changes to the stock option regime as of 1 January 2023

Before 1 January 2023, employee stock options would generally be taxable once exercised. As of 1 January 2023, the taxable moment depends on when the shares, obtained with exercising the stock options, are considered tradable. Exercise will generally remain the taxable moment of the stock options in case the shares are immediately tradable or if the employee elects in writing to keep exercise as the taxable moment.   

Expat ruling changes: Cap and scale back

As of 1 January 2024, the 30% ruling (expat facility) can be applied to a maximum of the standard under the Standards for Remuneration Act (WNT-norm) (2024: 233,000 euros [EUR]). In the case of expats who were already using the 30% ruling in 2022, the cap is only going to take effect as of 1 January 2026. In case the 30% ruling is applied as of 2023, then the income is subject to the cap as of 1 January 2024.

Furthermore, the 30% ruling is scaled back. For the first 20 months it remains possible to reimburse a maximum of 30% of the qualifying income free of tax, but after 20 months a reduced percentage of up to 20% can be applied, and for the following 20 months a further reduced percentage of up to 10% can be reimbursed tax free. After 60 months, the maximum duration of the 30% ruling has expired. This scale back measure does not affect expats who were already using the 30% ruling before 1 January 2024. 

Lastly, the partial non-resident status is being abolished as of 2025. This means that qualifying expats can no longer choose for non-resident taxation for income in box 2 and box 3. 

In June 2024, an evaluation of the expat rulings was published. This evaluation might lead to new changes or a withdrawal of the earlier reduction measures.

Adjustments to box 2 in 2024

Two tax brackets have been introduced in box 2 as of 2024: a basic rate of 24.5% for the first EUR 67,000 of income per person and a rate of 33% for the remainder. 

Adjustments to box 3 in 2023

While the government is still working on a new box 3 system, which will be implemented as of 1 January 2027 at the earliest, a transitional system has been introduced for the years 2023-2026. This transitional system takes into account the actual asset mix of a taxpayer and divides these assets into three categories: (i) bank deposits (savings); (ii) other assets; and (iii) debts. The value under each category on 1 January will be deemed to yield a fixed percentage. The weighted average yield over all categories will be applied to the total assets above a personal exemption of EUR 57,000 (2024) to determine the taxable benefit that will be subject to tax at a flat rate of 36% (2024). However, recently, the Supreme Court ruled that taxation in box 3 must be based at most on the actual return instead of the transitional system. So it is now up to taxpayers to demonstrate that the actual return achieved is lower than the lump sum calculated.