New Year, New… Employment Rules

Every year, employment rules change. This is what we can expect in 2024.

1. 30% Ruling

Let us start with the bad news for some expats: the 30%-arrangement will be scaled down as of January 1:

• for a maximum of 20 months, the tax-free allowance will not exceed 30% of the taxable salary;
• for the following (maximum) 20 months, the tax-free allowance will not exceed 20% of the taxable salary; and
• for the remaining 20 months (maximum), the tax-free allowance will not exceed 10% of the taxable salary.
• For employees who in the last period of 2023 (generally: the month of December 2023) enjoyed an allowance for which they held a 30% ruling, there is a transitional period, i.e., they can “sit out” the old arrangement.

A condition for the ruling is that your salary reaches a certain threshold after the 30% reduction has been applied. In 2024, the minimum salary (after application of the 30% ruling) will be € 46.954 and € 35.048 if you are under 30 and have a master’s degree.

2. Income Tax Rates

As in every year, the Dutch government has adjusted tax rates and brackets on Box 1, Box 2, and Box 3 incomes in the Netherlands for 2024. The brackets for Box 1 taxes (income from salary) are updated as follows:

• A tax rate of 36,97% applies to income up to € 75.518
• A tax rate of 49,5% applies to income over € 75.518

Box 2 taxes are paid on income from interest in a limited company. The percentage will be changed from 26,90 for all earnings to a stepped system of rates:

• A tax rate of 24,5% on earnings up to € 67.000
• A tax rate of 33% on earnings over € 67.000

The Box 3 tax rate is increasing from 32% to 36% on income made from savings and investments.

3. Travel Allowance

The maximum tax-free travel allowance has also increased as of January 1, 2024, from € 0,21 to € 0,23 per kilometer. This allows employees to save slightly more on their taxes, as a higher portion of their travel expenses is considered tax-deductible. Anything paid over € 0,23 per kilometer is treated as (taxable) wages.

4. Labor Market Reform: Dismissal Law

The plans include extending the period during which consecutive fixed-term contracts are seen as one period of employment (with a maximum of three fixed-term contracts in three years). The now-existing period of six months will be changed to five years. This means that for fixed-term contracts, there will only be a new contract in the chain of contracts if contracts are interrupted for a period longer than five years. The government also wants to abolish zero-hour contracts.

5. Clarification of the Difference Between Employee and Self-Employed

A clear separation between employees and self-employed entrepreneurs is very important. The new legislation focuses on management and control, the nature of the work, and the worker’s independence. This should combat false self-employment and create clarity for employers.

6. Mandatory Appointment of a Confidential Counselor

It will become mandatory for employers with more than ten employees to appoint a confidential counselor.

7. Legal Reform of the Non-Competition Clause

This clause is being revised to “protect business interests more effectively.” However, the reform was necessary to protect employees. Duration, geographical reach, and the motivation of the important business interest will be more strictly regulated. Employers who invoke a non-competition clause have to pay compensation to the employee.

These are the most important changes for expats regarding their employment.

We may see other changes as the year progresses. I will try to keep you informed about this. I do this mainly through LinkedIn but also through the seminars I provide for Expat Republic. The next one is on Tuesday, January 16, at 7 p.m. Be there!

For more information, please contact Ronald M. Beltzer, Attorney – Employment law specialist, at Flott Advocatuur.