Hundreds of expats plan court appeal to restore stripped 30 percent ruling tax benefit

Hundreds of expats are working on an appeal against a court ruling resulting in their 30 percent ruling tax benefit getting cut by three years. The District Court of Noord-Holland ruled on March 8 that the government’s 2019 decision to cut the duration of the tax benefit from eight to five years could also apply to existing users. “An expat who came to the Netherlands after 1 January 2016 suddenly lost three years of his benefits,” said Taxperience, which represented 850 expats in the case filed against the cut.

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.

In 2019, the government decided to shorten the term of the scheme by three years. From then on, foreign workers would only benefit from the 30 percent ruling for five years instead of eight. However, unlike when the government cut the term from ten to eight years in 2012, it decided not to spare existing recipients in this cut.

Taxperience fought that decision in court on behalf of 850 expats. “A deal is a deal, and a promise is a debt. These are two basic principles that we teach our children at an early age,” Hans de Vries of Taxperience said in a press statement provided to NL Times. “Apparently, different rules apply to the Dutch government.”

According to the affected expats, the government suddenly taking three years off a benefit they already qualified for is contrary to the general principles of proper legislation, such as due care, legal certainty, and proportionality.

But the court ruled against them, the attorney told NL Times. According to the court, the government carefully considered the consequences, and it has been established for some time that new legislation can change existing and continuing agreements. The court ruled that the affected immigrants should have taken this into account.

De Vries, the Taxperience attorney and partner handling the case, told NL Times they will definitely appeal the case directly to the country’s Supreme Court. Many of the 850 plaintiffs in the case are still living and working in the Netherlands, De Vries said. They represent a wide range of nationalities, including highly-skilled and highly-educated immigrants in academic positions, high-tech roles, and information technology jobs.

According to the Taxperience, the ruling also impacts new cuts to the 30 percent ruling that parliament approved last year in the run-up to the parliamentary election. According to that approved proposal, the 30 percent ruling will be gradually reduced to zero in three steps of 20 months, starting this year.

The new reduction currently only applies to new arrivals. Anyone who already has the benefit can keep it for the five years, as legislated in 2019.

There are also some doubts about the newest cuts to the 30 percent ruling in the Senate after several large companies threatened to take their business elsewhere. Companies like ASML and Boskalis worry that the business climate in the Netherlands is deteriorating and that they soon won’t be able to attract international talent.

The plaintiffs in the case are discussing the expected legal fees and court costs this week and will then decide how to move forward with an appeal. They anticipate the total cost to be close to 50,000 euros.