Expats in Netherlands to see tax breaks cut to five years Expats in Netherlands to see tax breaks cut to five years

Expats in Netherlands to see tax breaks cut to five years
25 Jul 2018

Dutch junior finance minister Menno Snel has confirmed that both current and new beneficiaries of the 30% expat tax rule will now receive it for only five years rather than eight as of next year in order to reduce the state’s fiscal burden.

In a briefing, he noted that 80% of recipients do not use the tax break for more than five years in any case, while of those that do a substantial proportion are not temporarily based in the Netherlands but are there on a long-term basis.

"In that light, the cabinet has, in accordance with the coalition agreement, decided to reduce the time of the 30% ruling from the 1st January 2019 from eight to five years, for new as well as current cases," Snel said.

The Labour Party (PvdA), Reformed Political Party (SGP) and groups of campaigning expats, universities and businesses, have requested the introduction of a transition period to make the shift easier for existing expats to cope with. It is estimated such a move would cost the government about €1.9 billion (US$2.2 billion).

The Association of Universities in the Netherlands (VSNU) also joined with other organisations to send a letter to the minister indicating that 6,000 to 7,000 researchers benefited from the ruling, which allows expats to claim the first 30% of their salary tax-free. They are typically young researchers on low salaries. University workers make up 7.5% of those taking advantage of the tax break, which is granted to foreign workers judged to be taking specialist jobs that could not be filled by a Dutch resident.

The vast majority of people who benefited from the 30% rule during 2016 (77%) reportedly earned less than €100,000, (US$116,562), but there were reportedly “large differences between the users”.

Someone earning €60,000 (US$69,937) a year would see their net income instantly cut by almost €8,000 (US$9,325) as a result of the move to about €39,000 (US$45,459) next year. A person earning €100,000 (US$116,562) before tax would see their net income drop from about €74,000 (US$86,256) to €57,000 (US$66,440).

United Expats of the Netherlands, a group that formed in April, is campaigning for a transition period so the policy only applies to new cases.

Communications chair Jessica Taylor Piotrowski told DutchNews.nl: "We understand the need for fiscal change, but this is going to consistently and acutely affect families, with children, a home, mortgages and lives… and with six months’ notice."

Emma Woollacott

Emma Woollacott is a freelance business journalist. Her work has appeared in a wide range of publications, including the Guardian, the Times, Forbes and the BBC.

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Dutch junior finance minister Menno Snel has confirmed that both current and new beneficiaries of the 30% expat tax rule will now receive it for only five years rather than eight as of next year in order to reduce the state’s fiscal burden.

In a briefing, he noted that 80% of recipients do not use the tax break for more than five years in any case, while of those that do a substantial proportion are not temporarily based in the Netherlands but are there on a long-term basis.

"In that light, the cabinet has, in accordance with the coalition agreement, decided to reduce the time of the 30% ruling from the 1st January 2019 from eight to five years, for new as well as current cases," Snel said.

The Labour Party (PvdA), Reformed Political Party (SGP) and groups of campaigning expats, universities and businesses, have requested the introduction of a transition period to make the shift easier for existing expats to cope with. It is estimated such a move would cost the government about €1.9 billion (US$2.2 billion).

The Association of Universities in the Netherlands (VSNU) also joined with other organisations to send a letter to the minister indicating that 6,000 to 7,000 researchers benefited from the ruling, which allows expats to claim the first 30% of their salary tax-free. They are typically young researchers on low salaries. University workers make up 7.5% of those taking advantage of the tax break, which is granted to foreign workers judged to be taking specialist jobs that could not be filled by a Dutch resident.

The vast majority of people who benefited from the 30% rule during 2016 (77%) reportedly earned less than €100,000, (US$116,562), but there were reportedly “large differences between the users”.

Someone earning €60,000 (US$69,937) a year would see their net income instantly cut by almost €8,000 (US$9,325) as a result of the move to about €39,000 (US$45,459) next year. A person earning €100,000 (US$116,562) before tax would see their net income drop from about €74,000 (US$86,256) to €57,000 (US$66,440).

United Expats of the Netherlands, a group that formed in April, is campaigning for a transition period so the policy only applies to new cases.

Communications chair Jessica Taylor Piotrowski told DutchNews.nl: "We understand the need for fiscal change, but this is going to consistently and acutely affect families, with children, a home, mortgages and lives… and with six months’ notice."

Emma Woollacott

Emma Woollacott is a freelance business journalist. Her work has appeared in a wide range of publications, including the Guardian, the Times, Forbes and the BBC.

MORE ARTICLES THAT MAY INTEREST YOU

Is it all over the the 'all-in salary' in the Netherlands?

Expat tax changes will make Netherlands "less competitive"

Key payroll dates in the Netherlands 2018

 

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