Number of expats getting 30% tax cut nearly doubled in five years
The number of expats in the Netherlands who benefit from the 30 percent ruling has increased by around 85 percent in the past five years. The tax cut now costs the Dutch government over 1 billion euros per year, Follow the Money reports based on figures from the Ministry of Finance.
The 30 percent ruling means that knowledge migrants don’t pay tax on up to 30 percent of their salary for the first five years that they are in the Netherlands. On average, the ruling saves an expat around 12,000 euros per year, FTM reports based on calculations by the EU Tax observatory.
According to FTM, the Netherlands’ incentive to attract knowledge migrants is more generous than other EU countries’, and that shows in the numbers. Over 92,000 expats live with a tax break in the Netherlands, some 85 percent more than five years earlier. The rest of the European Union counts a total of 95,000 expats with tax breaks.
The increase in expats mainly occurred in the past two years. A spokesperson for the Ministry of Finance told FTM that the explosive growth is “probably a reaction to the corona crisis being over. “For 2024 and 2025, a slightly lower growth has been assumed.” The Ministry expects the number of applications for the 30 percent ruling to continue to grow in the years after, but less rapidly.
The Netherlands also pays the most of all EU countries for its expat scheme at over 1 billion euros per year. Portugal pays around 620 million euros per year, Belgium only 137 million euros.
These costs will also continue to grow as more expats apply for the scheme and wages rise. The Ministry of Finance expects a 10 percent increase in 2024 and 2025 - more than 100 million euros per year extra. After 2025, the fiscal costs are expected to increase by around 5 percent per year.
Pushed by NSC leader Pieter Omtzigt, the Schoof I Cabinet wnated to cut the tax benefits for high-earning expats, but large employers like ASML vehemently opposed this measure. The new government is now only cutting the expat ruling slightly - expats won’t pay tax on 27 percent, instead of 30 percent, of their income.
