The 30% ruling paid to some expats recruited to the Netherland from abroad is too generous and its provisions could be reduced, according to a report produced on behalf of the finance ministry.
Some 60,000 people currently claim the tax break, which effectively means they do not pay tax on the first 30% of their salary. This, the report concludes, cost the treasury some €755m in 2015 and is set to cost €902 this year.
To claim the ruling, expats have to earn at least €37,000 a year and must have lived at least 150 kilometres from a border with the Netherlands, effectively ruling out Germans and Belgians. The report says Indian nationals are the most likely to use the ruling, followed by British, American and Italian expats.
The 155-page document was compiled by research bureau Dialogic. It says the cost of relocating and living in the Netherlands is well below the 30% of salary that the tax break assumes. Instead the figure averages around 20%.
In addition, the report states, people on very high salaries – including senior executives and footballers – benefit disproportionately from the tax break.
Dialogic also suggests that the finance ministry impose a maximum amount, and exclude bonuses and reduce the eight year maximum to five or six years. However, scrapping the rule entirely, as some of the parties engaged in efforts to find a new coalition government want, is not an option, Dialogic says. The ruling is an important tool in encouraging highly-skilled expats to move to the Netherlands, and many other countries also offer similar packages, the report points out.
Caretaker tax minister Erik Wiebes said in a reaction it will be up to the next government to decide what action to take. Employers organisation VNO-NCW told the Financieele Dagblad it does not think any changes to be made.