Junior finance minister Menno Snel has briefed parliament that both current and new recipients of the 30% tax ruling will have their benefits reduced to five years next year. The briefing notes that 80% of recipients do not use the break for more than five years and for those that do ‘a substantial proportion are not temporarily based in the Netherlands but are here structurally or long-term’.
It continues: ‘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’. A transition period, requested by the PvdA and SGP parties as well as groups of campaigning expats, universities and businesses, would cost the government about €1.9 billion, the report says.
The briefing also contains information about the effects of this change. The Association of Universities in the Netherlands (VSNU) and other organisations said in a letter to the minister that 6,000 to 7,000 researchers benefited from the ruling, which allows expats to claim the first 30% of their salary tax free. These are typically ‘young researchers with low salaries who thanks to the 30% ruling can live and work in a relatively expensive country like the Netherlands’, the VSNU said.
Snel released data showing that university workers indeed made up 7.5% of those who take advantage of the tax break, which is granted to foreign workers who are judged to be taking a specialist job that could not be filled by a Dutch resident. The vast majority of people who benefited from the ruling in 2016 – 77% – earned less than €100,000, but there were ‘large differences between the users’.
According to the paper, someone earning €60,000 a year with an eight year ruling would have an instant cut in net income of almost €8,000 to about €39,000 next year. A person earning €100,000 before tax would see their net income drop from about €74,000 to €57,000.
Families United Expats of the Netherlands, a group formed in April, is campaigning for a transition period so that the policy only applies to new cases, saying ‘a deal is a deal’. ‘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,’ said communications chair Jessica Taylor Piotrowski. She said the organisation would continue to lobby politicians, publish members’ personal stories, and campaign to protect those who have based their financial plans and commitments on the eight-year period.
‘Disappointment’ Bart Pierik, spokesman for the VSNU group, said the government acknowledged the importance of the tax break in universities, especially for PhD students on modest salaries of some €35,000 a year. ‘It was a disappointment, and is very near-sighted,’ he told DutchNews.nl. ‘The Netherlands is not a cheap country and the 30% ruling comes in very handy. ‘To scrap it from one day to the next would be very negative and damage our reputation as a good place to do research.’