In 2020, it became possible to apply for the 30% ruling from the first day of employment rather than the first day of the month. As a consequence, the duration of the 30% ruling can now also end during the month. Recently, the Knowledge Group International Tax Law IB-non-profit/LB/PH assessment has taken a position regarding the application of the 30% ruling in payroll administration when the duration of the 30% ruling ends during the month. This position can be summarized as follows:
- If the 30% ruling ends before the payroll date, the 30% ruling cannot be applied for that month because the taxable moment of the salary occurs after the end of the ruling period.
- If the 30% ruling ends after the payroll date, the 30% ruling can only be applied to the salary related to the workdays during the duration of the 30% ruling. The 30% ruling cannot be applied to the salary related to workdays after the end of the 30% ruling period. Therefore, the salary must be split.
The position that the 30% ruling can no longer be applied to salary with a taxable moment after the ruling period is known for some time. However, the position that the 30% ruling should be applied on a pro rata basis when the duration ends between the last day of the month (or payroll period) and the taxable moment of the salary in that month is new. This leads to an increasingly complex payroll processing for employees with the 30% ruling. You can find more information about this here, as well as details regarding the applicable workday fraction.