More and more MP's want to scrap new cuts to expats' 30% ruling

An increasing number of parliamentarians are having doubts about cuts to the 30 percent ruling they voted in just before the parliamentary election last year. D66, BBB, and CDA all regret their vote for Pieter Omtzigt’s proposal to cut the tax benefit for expats, EenVandaag reports.

On October 26, during the last debate before parliament went on recess for the election campaign, the parties passed a large number of proposals. One was to compensate students who fell under the student loan system. Omtzigt, then an independent parliamentarian and now leader of the NSC, proposed paying for that compensation by cutting the 30 percent ruling in steps to zero. All parties except the VVD voted in favor.

The business community immediately raised concerns that this would deteriorate the Netherlands’ business climate. CEO Peter Wennink of ASML, the largest company in the Netherlands, threatened that his business would expand abroad if it couldn’t recruit international talent to the Netherlands. Boskalis moved part of its headquarters out of the Netherlands for the same reason, and several other large companies are considering similar steps.

Those concerns have also reached the Tweede Kamer, the lower house of the Dutch parliament, EenVandaag reported after surveying MPs. The D66, BBB, and CDA now want to scrap the plans to cut the 30 percent ruling. The three parties have 21 seats in the Tweede Kamer. With the VVD’s 24, nearly a third of the 150 parliamentarians are against the cuts.

On reflection, cutting back on the expat scheme wasn’t a great idea, CDA leader Henri Bontenbal told EenVandaag. “We were stuck and wanted to help those students, but this cutback was really too harsh,” he said. “We shouldn’t have done this like this. Dealing with so many motions under so much time pressure, you cause damage. This is an example of that.”

BBB MP Henk Vermeer also thinks the parliamentarians should have taken more time to consider the proposed cuts. “We thought it was a diabolical dilemma. We wanted to do something for those students, but we were actually against stripping down the expat scheme. There was too much pressure that evening. I think we should reconsider this decision. And I also suspect that this is on the formation table.”

Whether the plan will be reversed remains to be seen. Outgoing State Secretary Marnix van Rij of Finance is expected to present an alternative plan before the end of the month. He hopes to help the students who missed out on the basic study grant and now have student debts to repay without cutting the expat scheme. It is then up to parliament to agree to Van Rij’s new proposal.

The 30% ruling is a tax credit for highly skilled and highly educated foreign workers recruited abroad. It allows immigrants to keep 30 percent of their salary without paying income tax, under certain conditions. Their employers have to apply for the scheme, and the Tax Authority has to approve it.

The tax credit is meant to help expats cover moving costs and the costs of setting up a new home and life in an often more expensive country with a higher-valued currency. That makes the Netherlands more attractive in the competitive global labor market, is the idea.