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Anger escalates over Netherlands expat 30 per cent tax cut change
| Published: | 24 May at 6 PM |
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Tagged: The Netherlands
As the row over the Netherlands government’s cut to the 30 per cent ruling escalates, the real financial damage to expats is becoming clear.
For many expatriates over the past few years, the Dutch tax advantage for incoming professionals has played an important part in their decisions to choose the Netherlands over and above a number of other destinations. Savings made by the treatment of the first 30 per cent of salary as tax free has also encouraged many to buy properties with the help of mortgages as well as structuring savings goals over the eight year period. The news that established expat professionals will lose three years’ worth of tax breaks has thrown many financial plans into chaos.
When the scheme was first introduced, the exemption term was set at 10 years, but was reduced to eight years for new applicants in 2012, with existing users exempt from the changes. Due to the lack of effect on expats already working in the Netherlands, opposition for the first downgrade was muted. However, this latest change to the rules now includes existing users and cuts the time period down to five years, with expat groups, universities and employers all up in arms due to the unfairness of the ruling, especially as no transition period has been allowed.
Knowledgeable expats have based the choice of school for their children on the eight year period, mortgages have matched the eight year term and renters have based their monthly rent on affordability taking into account the tax cut period. Other advantages will also be lost, with those at present on the plan also exempted from paying wealth taxes on their assets. More than 25,000 expats have now signed a petition urging the Dutch government to honour its promised commitments to those from the international community who’re already on the plan. As said by the country’s PM, ‘a deal is a deal’.
For many expatriates over the past few years, the Dutch tax advantage for incoming professionals has played an important part in their decisions to choose the Netherlands over and above a number of other destinations. Savings made by the treatment of the first 30 per cent of salary as tax free has also encouraged many to buy properties with the help of mortgages as well as structuring savings goals over the eight year period. The news that established expat professionals will lose three years’ worth of tax breaks has thrown many financial plans into chaos.
When the scheme was first introduced, the exemption term was set at 10 years, but was reduced to eight years for new applicants in 2012, with existing users exempt from the changes. Due to the lack of effect on expats already working in the Netherlands, opposition for the first downgrade was muted. However, this latest change to the rules now includes existing users and cuts the time period down to five years, with expat groups, universities and employers all up in arms due to the unfairness of the ruling, especially as no transition period has been allowed.
Knowledgeable expats have based the choice of school for their children on the eight year period, mortgages have matched the eight year term and renters have based their monthly rent on affordability taking into account the tax cut period. Other advantages will also be lost, with those at present on the plan also exempted from paying wealth taxes on their assets. More than 25,000 expats have now signed a petition urging the Dutch government to honour its promised commitments to those from the international community who’re already on the plan. As said by the country’s PM, ‘a deal is a deal’.
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