The start of a new year brings not only new resolutions and crowded gyms but also important changes in laws and regulations. This year is no exception, with several significant amendments to employment law that took effect on 1 January 2025. Here, we outline the key points to watch out for as an employer or employee.
As customary, the annual adjustment of the minimum wage takes place on 1 January. For 2025, this means an increase of 2.75%, resulting in a minimum hourly wage of €14.06 for employees aged 21 and older. This adjustment aims to align wages with inflation and other economic factors, ensuring that employees maintain their purchasing power.
With the rise of people working remote, the ‘remote work allowance’ remains a significant topic. As of 1 January 2025, the maximum tax-free allowance that employers can provide has increased from € 2.35 to € 2.40 per day. This is a small but welcome adjustment for many employees, helping to cover the costs associated with working from home.
As of 1 January 2025, the percentage of the tax-free allowance in the work-related costs scheme will also increase. For the first € 400,000 of the total taxable salary, the percentage will rise from 1.92% to 2%. Above € 400,000, the percentage will remain at 1.18% of the total wage sum.
An important change for employers is the abolition of the low-income benefit (LIV) as of 1 January 2025. This was an annual subsidy for employers with employees earning a low income. The removal of this scheme means that employers will now have to operate without this financial support, which may lead some to reconsider their workforce.
Employees who are dismissed by their employer are entitled to a transition payment. As of 1 January 2025, the maximum amount of this payment has been increased to € 98,000. This annual adjustment is linked to the development of contractual wages and provides employees with greater financial security when searching for a new job.
Although the obligation has been in effect since 1 July 2024, it is important to highlight that organizations with more than 100 employees must submit their 2024 report to the Netherlands Enterprise Agency (RVO) by 30 June 2025, at the latest. This report includes data on the CO2 emissions from business travel and commuting of employees, as part of efforts to reduce the environmental impact of mobility.
Starting 1 January 2024, the 30% ruling – a tax scheme where expats receive part of their gross salary tax-free – was reduced. From 2024, the maximum tax-free reimbursement of 30% for 3 years was adjusted to a declining percentage: a maximum of 30% for the first 20 months, 20% for the following 20 months, and 10% for the last 20 months of the term. There is a transitional arrangement for foreign workers who already received a tax-free 30% reimbursement in the last pay period of 2023, for which these workers had a 30% ruling. These workers retain their right to the 30% reimbursement for a maximum of 60 months.
The changes to the 30% ruling that came into effect in 2024 became complicated over the course of the year, and the business community strongly protested. Therefore, it has been decided that the scheme will be changed again as of 1 January 2025. The reduction from 30% to 30%-20%-10% will be completely reversed. The government concluded that the reduction may have too much of an impact on the business climate. Therefore, for the years 2025 and 2026, the percentage will remain at 30%.
However, the government has included a different way of cutting costs on the 30% ruling in the Netherlands Budget Memorandum for 2025. The maximum tax-free reimbursement of 30% will be reduced to 27%, and salary standards will be adjusted, but this change will only take effect in 2027.
As of 1 January 2025, the salary thresholds for knowledge migrants will increase by 6,7%. For knowledge migrants aged 30 or older, the threshold will be €5.688 (excluding holiday allowance), and for knowledge migrants under 30, the threshold will be € 4.171 (excluding holiday allowance).
As of 1 January 2025, the so-called enforcement moratorium will be lifted, and the Dutch Tax Authority (Belastingdienst) will begin enforcing regulations related to false self-employment. The assessment of false self-employment will be based on the facts and circumstances outlined in the Deliveroo ruling. In this ruling, the Dutch Supreme Court determined 9 criteria that may indicate the existence of an employment contract.
The Tax Authority has stated that it will not impose fines in 2025. However, starting from 1 January 2025, correction obligations and additional assessments may be imposed. Additionally, the Tax Authority’s ‘model agreements’ will be phased out. Ongoing and already approved model agreements can still be used until their expiration date, but the Tax Authority has stopped approving new model agreements. We discuss the ‘DBA law’ and its enforcement in a separate blog.
The new year brings significant changes to the employment law that impact both employers and employees. The increase in the minimum wage and the home office allowance provide financial benefits for employees, while employers must deal with the abolition of the low-income benefit and stricter reporting obligations. The potential revision of the 30% ruling and the rise in salary standards for highly skilled migrants highlight the ongoing balance between fiscal reforms and maintaining an attractive business climate. Furthermore, the lifting of the enforcement moratorium marks a new phase in tackling false self-employment. These changes underscore the importance for all parties involved to be well-prepared for the implications of these new rules in 2025.
Should you need advice on false self-employment or require any other legal assistance, please do not hesitate to contact us.
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