Fewer knowledge migrants due to cuts to 30 percent ruling

Cutting the 30 percent expat ruling will result in fewer knowledge migrants coming to the Netherlands, reports SEO Economic Research in a report commissioned by the Senate and the Tweede Kamer, the lower house of the Dutch parliament. The researchers estimate that 10 to 15 percent fewer highly skilled workers will come to the Netherlands as a result.

Until recently, foreign workers did not have to pay tax on 30 percent of their wages during the first five years in the Netherlands. Last fall, on the initiative of GroenLinks-PvdA, Volt, ChristenUnie, and Pieter Omtzigt - the current chairman of the NSC - the Tweede Kamer cut this 30 percent ruling. As a result, expats only benefit from this tax relief for the first 20 months. In the following 20 months, they receive 20 percent tax-free and 10 percent for an equally long period.

According to the researchers, the 30 percent scheme generates more tax than it costs, as knowledge migrants have well-filled wallets. Abolishing or reducing the scheme could, therefore, negatively impact the tax authorities. They also expect that companies would be less inclined to invest in the Netherlands. In 2022, around 110,000 expats used the 30 percent rule.

The business associations VNO-NCW, MKB-Nederland, and FME say that the cuts are bad for the future of the Netherlands. "To maintain our prosperity and well-paid jobs, innovative companies, large and small, are crucial. They compete worldwide for the scarce top talent, especially in technical fields. Other countries are also competing intensively for these people. They also have such regulations. Therefore, the 30 percent rule is indispensable if we want to be a true knowledge-based economy," said Ingrid Thijssen, chairwoman of the VNO-NCW.

"It is important that our Dutch companies can remain innovative and competitive. To do this, we need technical talent from abroad. The 30 percent scheme makes a decisive contribution to making the Netherlands attractive," FME Chairman Theo Henrar stated.

The business industry's concerns also reached the Tweede Kamer in March 2024, EenVandaag reported. For instance, the D66, BBB, and CDA no longer wanted to scrap the plans to cut the 30 percent ruling.

On reflection, CDA leader Henri Bontenbal told EenVandaag that cutting back on the expat scheme wasn't a great idea. "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."

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.