With the shortening of the 30% ruling in sight, Philips, a major company in the Netherlands, has decided to offer a transition period to its expat employees affected by the upcoming cuts.
In April 2018, the Dutch government announced plans to shorten the 30% ruling from eight years to five per January 1, 2019. This ruling allows highly skilled migrants to receive 30% of their salary tax-free.
The cuts to the duration of the 30% percent ruling will apply not only to new applicants, but to existing beneficiaries as well, and there is no transitional period. Following this news, there were several developments and letters went back and forth between the Dutch government and other parties. Some businesses even sent an urgent letter asking the government to reconsider the cut for existing beneficiaries and organise a transitional period.
As the Dutch government is not prepared to offer existing beneficiaries of the 30% ruling a transitional period, Philips has decided to take matters into their own hands and offer one to their employees instead.
According to Steve Klink from Philips Group Press Office, an email sent to employees states, “in order to mitigate the impact of the proposed change, Philips’ Executive Committee intends to provide those employees affected with compensatory support for a transition period”. After the new expiry date of an employee’s 30% ruling, Philips will provide a transition period of a maximum of three years.
The first year after expiry, Philips will offer 100 percent compensation of the difference in base salary. This will then decrease to 75 percent in the second year and 50 percent in the third and final year of one's transitional period. This compensation will not be given beyond an employee’s original 30% ruling end date.
The transitional period Philips is offering to its employees will likely only apply to existing beneficiaries of the 30% ruling, not new applicants, and it will also only apply to base salary, not bonuses.
Philips employees are positive about this development and happy to see that the company puts its employees first. One employee asserts, “In this era of living by the quarterly balance sheets, it is quite remarkable to see companies that value people”.