Leave the 30% tax ruling for expatriates alone!

Sep 13, 2017

In June, the Dutch Ministry of Finance has (under pressure of left-wing parties including the PVV) presented to parliament a critical report regarding the effectiveness of the 30% tax facility. This facility is intended to cover the extra expenses that an expatriate has when moving to the Netherlands. The report suggests various amendments to the 30% facility.

A new government is in the process of being formed in the Netherlands and let us all sincerely hope that the extremely short-sighted and ‘penny-wise-pound-foolish’ recommendations made in the report will all not be implemented by this newly formed government.

The (remarkably unwise) recommendations are:

  • reduce the maximum term of the 30% tax facility from eight to five years;
  • cap the income on which the 30% facility is calculated to a maximum of €100,000;
  • increase the distance from the Dutch border that an individual must live, prior to being recruited here. It proposes that employees inbound from “neighbouring” countries Belgium, Luxemburg, France, Germany, Denmark, and the UK would not be eligible to take advantage of the facility, the report even suggests to close the 30% facility for all EU countries!

All recommendations, enormously reduce the attractiveness of the Netherlands as a country to relocate. Our prediction is that the ultimate opportunity cost of companies not deciding to choose the Netherlands will be much higher than the savings.

The second recommendation will lead to a lot more work for us in the form of cross-border salary splits in order to keep the taxable income in the Netherlands below €100,000 (and paying out the rest by a foreign group company, as expatriates usually will not only work in one country alone) which is good news for us but bad news for the Dutch treasury.

The third recommendation is the ultimate ‘shoot-yourself-in-the-foot measure’. Currently thousands of UK companies are considering to move out of London in view of the Brexit drama. London is currently still safe for the 30% facility (i.e. just outside the >150 km range). This suggested change will mean that virtually no UK Brexit-fugitives will choose the Netherlands as a new location. How stupid can we be?