Migrant workers

Fewer migrants are being admitted to the Netherlands

The government wants to reduce labor migration, but also improve integration and social cohesion. Within the Ministry of Social Affairs and Employment, work is being done on broad prosperity development and system revision for childcare. The goal is to get more immigrants to participate in the labor force. The government wishes to help with language, employment, and education about Dutch culture, including customs and values. A more comprehensive strategy to get this group to work is provided by the action plan “Status holders at work.” Creating entry-level positions for status holders is a part of this. Through the “Further Integration in the Labor Market” work agenda, the government also encourages people with a history of migration to participate in the labor force. This relieves employers of their worries, so that they do not spend unnecessary money and time on this.

Tackling abuses and supervision of employment agencies towards migrant workers

According to the “Modernization and Expansion of Criminalization of Human Trafficking Act” bill (expected to go into effect in 2025), grave labor violations are punishable by law as “serious harm.” The House of Representatives is currently processing a proposed law called the Admission of the Provision of Workers Act on the Admission of the Provision of Labor (WTTA) (Phase 3), which aims to combat fraudulent employment agencies.

Tax

The 30% tax ruling will be lowered to 27%

The tax benefit of the 30% ruling (expat ruling) will decrease to 27% by 2027. Furthermore, the wages you pay your employees must meet a higher standard (inkomensnorm) in order to use the expat facility.
The 30% ruling allows you to give your foreign or posted worker a tax break to help cover moving expenses or a higher standard of living. When using this facility, you can pay a portion of your wages tax-free. You and your employee must meet the criteria for the 30% rule.
The exact changes in your situation are determined by the date you began using the 30% rule for your employee.

• If the 30% ruling started before the 1st of January 2024:

You can pay your employee a maximum of 30% of their wages tax-free for 5 years. The income standard remains € 46.107,- (in 2024, this amount is corrected for inflation yearly).

• If the 30% ruling (expat ruling) started after the 1st of January 2024:

In 2024, 2025, and 2026, you are allowed to pay your employee a maximum of 30% of their wages tax-free. The income standard remains € 46.107,- (in 2024, this amount is corrected for inflation yearly).
From 1 January 2027 you may pay your employee a maximum of 27% of their wages tax-free. The income standard is increased to € 50.436,-.
The change in law is expected to enter into effect on the 1st of January 2025.

New income tax bracket

The classification of tax rates and brackets is about to change. In 2025, there will be three tax brackets, each with its own rate. As a result, you will owe less tax on the initial portion of your earnings. Also, the employment tax credit will increase. The general tax credit (algemene heffingskorting, AHK) will go down.

New tax rates

These are the rates you will pay in 2025 if you are younger than the AOW pension age:
rate in the 1st bracket: 35.82%
rate in the 2nd bracket: 37.48%
rate in the 3rd bracket: 49.50%

New tax brackets

These are the income thresholds per tax bracket in 2025:
1st bracket: income up to € 38.441,-
2nd bracket: income from € 38.441,- to € 76.817,-
3rd bracket: income over € 76.817,-

This measure is improving middle-income and various vulnerable groups. The first income tax bracket that applies to an income up to € 38.441,- per year will be reduced to 35.82%. There will also be a second income tax bracket of 37.48% that applies to income between € 38.441,- and € 76.817,- per year. Thus working people and AOW’ers will keep more net income in 2025.

Employment tax credit up

In 2025, the employment tax credit will rise to € 5599,-, while in 2024 was € 5532,-. Your taxable profit determines the amount of the employment tax credit. The amount you can deduct becomes lower if your taxable profit is € 43.071,- or more.
The general tax credit (AHK) will go down with € 335,-. In 2025, the maximum general tax credit is € 3027,-. This was € 3362,- in 2024. At a minimum income, the maximum deduction applies. The AHK becomes lower if you earn more than the minimum income.
With these adjustments the government wants to make sure citizens and entrepreneurs with a middle income will have more to spend. The change in law is expected to enter into effect on the 1st of January 2025.

Higher value-added tax (VAT)

The Netherlands will see an rise in VAT from 9% to 21% on accommodation, literature, concerts, museums, theater productions, and other leisure activities. This pertains to business owners in the cultural and athletic domains. The VAT increase will apply to, for instance:

• books, e-books, newspapers, and magazines (including lending these)
• concerts, music festivals, theatre and dance performances, cabaret, and musicals
• commercial sports activities, for example gyms (fitness centres), ski slopes, ice rinks, and on-site sports classes
• access to sports events (also applies to non-commercial sports clubs)
• public museums

The lower 9% VAT rate will continue to apply to cinemas, amusement parks, playgrounds, ornamental gardens, circuses, fun fairs, zoos, and non-commercial sports clubs.
With this measure, the government aims to raise its tax revenue. And to simplify the tax system.
The change in law is expected to enter into effect on the 1st of January 2026.

Less income tax in box 2 for substantial business interest

Regarding income from a significant business interest (box 2), do you pay taxes on it? For instance, do you serve as a director or major shareholder (DGA) in a company? You will pay less income tax.
As of 2024 you pay 33% tax at box 2’s high rate (the top rate). This is applicable starting at € 67.000,- in taxable income. This top rate will be 31% of a taxable income of € 67.804,- as of 2025.
You pay tax on income from a significant business interest in box 2. A significant interest is yours if you:
possess at least 5% of the stock, profit-sharing certificates, enjoyment rights, or voting rights in a company, either alone or jointly with your tax partner.
The change in law is expected to enter into effect on the 1st of January 2025.

Benefits

Low-income benefits to be abolished in 2025

Do you provide your employees with low-income benefits (LIV)? You will not be eligible to receive this wage cost contribution after 2025.
Workers covered by the LIV plan put in a minimum of 1,248 hours annually. Additionally, their hourly wage ranges from 100% to 125% of the federal minimum wage.
Please take note that as of the 1st of January 2024, the average hourly wage has a lower upper limit of 104% instead of 125%.
It is anticipated that the amended law will take effect on the 1st of January 2025.

Zero hour contracts

A bill will be introduced that will offer more job security to flexible workers. Zero-hour contracts will be replaced by a “basic contract” with greater schedule and income security under this bill. Temporary work will be shortened in its most uncertain phases, and “revolving door constructions” of temporary contracts must be avoided.

Overtime

Low(er) unemployment benefit rate for overtime

Employers with staff on contracts of 30 hours or more, will soon be exempt from paying extra unemployment benefit contributions (WW-premie). This measure will be applied only for overtime worked by employees on permanent contracts of 30 hours or more per week. Currently, overtime is limited to 30% of regular hours without incurring higher contributions. Starting from the 1st of January, 2025, the overtime limit of 30% of regular hours will be removed. In this way, flexibility for companies will be increased and security for employees with permanent contracts will be enhanced.

Transition Pay

Transition payment compensation after 2 years of illness only for small employers

This compensation scheme will be limited to small employers, meaning employers with fewer than 25 employees. Employers who employee 25 or more employees will no longer be entitled to their employees’ sickness compensation. This measure will take effect as per the 1st of July 2026. However, the effective date of this measure is not definite yet. The compensation scheme still needs to pass through the second and first chamber.

Healthcare

Safe and healthy working

The aim of the Arbovisie 2040, which was published last year, is to reduce the number of occupational accidents, illnesses, and fatalities. The action program seeks ways for employers to enhance their prevention efforts. In 2025, regulations concerning asbestos will be updated in accordance with the EU directive on asbestos and other hazardous substances. Additionally, the Arbovisie 2040 strongly emphasizes not only on addressing psychosocial work pressures, including burnout, but also on tackling aggression and violence. The action program addressing sexual harassment and violence. At the same time, it focuses on promoting social safety in the workplace.
Based on the Arbovisie 2040 action plan, the government is also launching a National Action Programme to address the problem of sexually transgressive behavior and sexual violence. The main aim of this program is to create a respectful and safe society for every individual. The program focuses on prevention, recognition, and support for victims. It has a comprehensive approach to such matters, using five key action lines and involving multiple government ministries.

Personnel retention bill in times of crisis

The Bill on Personnel Retention in Times of Crisis is designed to help employers keep their staff during unexpected events. Such cases could be fires, floods, or pandemics. In order to avoid layoffs, companies experiencing a 20% decline in work over two months can utilize the Employee Retention in the Event of a Crisis Bill (Wpc) for a period of up to six months. Employers have the option to redeploy staff at full pay, reduce wages by 10% with a subsidy covering 65% of unworked hours. Alternatively, employers can combine these strategies to support their workforce during difficult times.