The duration of the 30% ruling will be limited to max. 5 years as of January 1, 2019, also for the existing 30% ruling holders!
The Government plans to propose in the Tax Plan 2019 to reduce the maximum duration of the 30%-Rule from 8 years to 5 years. This will not only be for new cases, but also for all current cases according to a letter of the State Secretary of the Ministry of Finance, which was approved by the Council of Ministers. So it is the expectation that in the Tax Plan 2019 indeed the maximum duration of the 30%-Rule will go to 5 years, without any transition rules for the current 30%-rule holders.
This means that all current 30%-rule holders who have applied for the 30%-Rule 5 years ago or longer, will lose the 30%-Rule on January 1, 2019.
Employees who applied for the 30%-Rule less than 5 years (or could have applied for it), can have the 30%-Rule for maximum 5 years. In addition, the period that extraterritorial cost can be reimbursed tax free will also be maximum 5 years (usually this is possible if the 30%-Rule does not apply). Finally, the period of 5 years will also be valid for opting for the partial non-residency status for 30%-Rule holders.
In the letter of the State Secretary nothing is mentioned about the position of the 30%-Rule holders that got the ruling for 10 years (granted before 2012). However, it is the expectation that these 30%-Rule holders will also lose the 30%-Rule as of January 1, 2019.
As this will have an impact on a number of employees with the 30% ruling, we think it is important to first determine who will lose the ruling already as of January 1, 2019. Clear communication and management of expectations will be very important.