Heading into the new year, 2024 brings some important changes in Dutch employment law and regulations which impact both individuals and businesses. In this article, we will delve into five key updates that come into effect in 2024.
1. Tax-free travel allowance
Employers can reimburse their employees’ travel expenses tax-free, which applies to any kind of transportation such as traveling on foot, cycling, driving a private car or using public transportation. The exception is this is not applicable if the employer provides the employee with a company car or a company bicycle.
The tax-free reimbursement rate for business kilometers will be increased from € 0,21 to € 0,23. In the Netherlands, there is no legal obligation to reimburse travel expenses unless stated in the collective labour agreement (CAO).
Starting in 2024, employers no longer need to deduct wage tax first in situations where the employee does not travel via public transportation often enough. Go ahead and offer this secondary benefit to your employees!
2. Work from home allowance
Working from home is growing in popularity ever since the pandemic. If your business wants to offer some form of support for your employee’s ‘hybrid’ or ‘full-remote’ work environment, you can do so with tax-free allowances.
When working from home, there are additional costs that the employee incurs such as more heating, water, electricity, wifi, etc. Employees may also need to more equipment for their home office to work effectively. It is possible to request a tax-free allowance for these home office expenses, which has increased from € 2,15 to € 2,35 per day in 2024.
Please note that you may not receive the work from home allowance and the travel allowance on the same day. When the working location is hybrid, the employee can still request a travel allowance with two options.
- Option 1: Calculate the actual travel costs on days that you travel to work
- Option 2: Agree on a fixed fee with the employer if you travel to the fixed location on at least 128 days based on 214 working days per calendar year (128/214-day scheme)
3. 30% ruling change
The 30% ruling facility is available to foreign employees who are recruited outside the Netherlands to cover extraterritorial costs by receiving 30% of their salary tax-free. In addition to the above recruitment condition, you are eligible to the 30% ruling if you meet one of the salary conditions below:
- Your salary excluding the tax-free allowance is more than: €46,107 in 2024
- You are younger than 30 years old, have a Dutch master’s degree, and meet the salary criterion
You are also eligible when you have an equivalent title in another country.
Your salary excluding the tax-free allowance is more than: €35,048 in 2024
- You conduct scientific research
If you conduct scientific research at Dutch institutions, you are also eligible for the 30% ruling. In this case, there are no salary level requirements.
This tax advantage sees an important change in 2024. Throughout the first 5 years of the employee working in the Netherlands, the percentage of the 30% ruling facility will be gradually reduced:
- For the first 20 months, 30% of the salary will be tax-free
- The 20 months after that, 20% of the salary will be tax-free
- The 20 months after that 10% of the salary will be tax-free
The law ensures those who use the 30% ruling facility before 1 January 2024 have no reduction in the benefit. Only new applications made in 2024 onwards are subject to this change. If an annual income exceeds €233,000, it is ineligible for the 30% ruling.
4. Minimum wage
As of 1 January 2024, the employer must pay the employee at least the hourly minimum wage. The hourly minimum wage is € 13,27 gross and this is applicable for all employees aged 21 years and older. The minimum wage is no longer calculated by month, week, or day but the rate will be determined per hour. Under the previous weekly minimum wage system, a person working 40 hours a week could receive a lower hourly minimum wage compared to someone working 36 hours a week. The implementation of the hourly minimum wage ensures a longer working hour always results in a higher income.
5. Salary criteria for highly skilled migrants
Every year the Dutch government amends the gross monthly salary thresholds. As of 1 January 2024, thresholds for Highly Skilled Migrants will change the following gross monthly amounts excluding 8% holiday allowance. This change applies to applications submitted after 1st January 2024. It is not necessary to adjust for highly skilled migrants who are already on payroll with the previous salary criterion and a valid residence permit.
- Highly Skilled Migrants 30 years or older: € 5.331
- Highly Skilled Migrants younger than 30 years: € 3.909
- Highly Skilled Migrants during and after the search year€ 2.801
As an HR service provider, staying on top of the ever-changing legal landscape is important. These changes in Dutch employment law and regulations call for proactive measures to align your payroll and HR practices in compliance with the most recent laws. If you need support with any of your HR or payroll activities in 2024, our team would like to hear from you!
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