Expats paying for lower student loan interest with cuts to 30 percent ruling

Expats will pay for a reduction to the interest rate on student loans adopted by the Tweede Kamer, the lower house of the Dutch parliament, on Thursday. The amendment by Pieter Omtzigt, GroenLinks-PvdA, and ChristenUnie states that the funding for the lower interest rate will come from an accelerated reduction of the 30 percent ruling.

Currently, knowledge migrants don’t pay tax on 30 percent of their wages during their first years in the Netherlands as compensation for the extra costs they incur to temporarily work in the Netherlands, like moving costs and maintaining a second home. Omtzigt finds that unfair. According to him, the scheme means that international employees earn more than colleagues who do the same work. It also boosts immigration, he said. Limiting migration is a spearhead of his party’s (NSC) election campaign.

Omtzigt proposed gradually phasing out the 30 percent ruling, as the tax benefit for expats is commonly referred to. With the 200 million euros that raises, he wants to significantly reduce the interest on student loans for the “unlucky generation” of students who missed out on the basic study grant and had to borrow money for their studies. DUO recently announced that the interest on student debt would rise from 0.45 to 2.56 percent on January 1.

Outgoing State Secretary Marnix van Rij (Tax) urged the parliamentarians not to make changes to the 30 percent ruling before the already announced new evaluation of the scheme. “If you make changes, do so on a good analysis,” he told Omtzigt, according to Financieele Dagblad.

Employers organization VNW-NCW warned that the regulation is essential in keeping the Netherlands attractive for scarce talent, especially for high-tech companies and the economy of the future.