When MPs initially agreed to slash the expat scheme last year, a storm of protests broke out among some of the largest Dutch companies. Now, the Dutch parliament could reverse the decision.
The 30% ruling used to be the major benefit attracting talented expats to work in the Netherlands — until it was reported earlier this year that the scheme was to be scrapped.
What is (or was…) the 30% ruling? This refers to the Dutch tax credit scheme, which previously meant that 30% of an eligible expat’s salary untaxed for the first five years of their stay in the Netherlands. This has now been reduced to 30% for the first 20 months, 20% for the following 20 months, and then 10% for the final 20 months.
A new scaled arrangement — phasing out the amount of tax-free income over a period of 5 years — was also announced this year, to heavy criticism from across the Netherlands.
READ MORE | Dutch innovation and talent at risk after 30% ruling for expats slashed
Companies like ASML, desperately in need of these highly skilled employees, made it extremely clear that scrapping such an enticing arrangement would be disastrous.
However, the question on everyone’s lips at the moment is: how are MPs responding to the industry giants’ threats of taking their business elsewhere, if the Netherlands chooses to scrap the 30% ruling?
The House of Representatives has regrets
While parties like the CDA and BBB had previously supported the proposed cuts, they are now reconsidering their vote, EenVandaag reports.
It sounds like the parties would have liked the decision to have been less rushed and are now expressing disappointment that major actions were taken in such a short time.
This U-turn could be a sign that the expat scheme as we once knew it is not gone for good.
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What happens next with the 30% ruling?
We’ve all heard the saying “if it ’aint broke don’t fix it” and it seems that a majority is in favour of keeping the expat scheme as it was.
But hold your sighs of relief — this could still be a while away.
Despite some members being open to alternatives, an important sticking point remains the PVV. As often is the case, what they really want in the end is unclear.
READ MORE | Dutch Quirk #123: Have an extreme number of political parties
The right-wing party, led by the controversial Geert Wilders, has been chasing these 30% ruling reductions for years, denying the scheme’s benefits.
Yet, though they’re also eager to make a new coalition happen, they’ll need help from the VVD — staunch advocates of not gutting the 30% ruling.
READ MORE | If Wilders won’t be the next Dutch prime minister, who will?
So, at the Senate’s insistence, the (demissionary) cabinet will revisit options for developing tax schemes differently in the run-up to the Voorjaarsnota (the Spring Memorandum).
Voorjaarsnota (the Spring Memorandum): Voorjaarsnota refers to the forecast shared by the Dutch government regarding the status of their income and expenditures. It tracks whether these are still consistent with what the ministries agreed in the annual national budget, as well as provides a preview of plans for next year.
This means we can expect a re-evaluation of the expat scheme in a few months. And with the current negotiations for a new cabinet, reversing last year’s proposed cuts is definitely on the table.
BBB leader Van der Plas informed the NOS that this is under discussion within the “financial framework” being agreed between the four parties, so she cannot yet answer questions about the arrangement.
With all these re-evaluations, reversals, and reductions, the future of expats’ tax could use a bit of that infamous Dutch directness… 🙄
What do you think of the House of Representatives’ decision to reverse the 30% ruling? Are you affected? Let us know in the comments below.
‘It sounds like the parties would have liked the decision to have been less rushed and are now expressing disappointment that major actions were taken in such a short time.’
Zwak zeer zwak van deze twee partijen! Hopelijk vindt deze regeling gewoon snel doorgang! En zelfs als dat niet zo zou zijn begint het tegengeluid steeds meer voelbaar te worden.