The Great 30% Ruling Benefit Robbery
Imagine the outcry if the Dutch government were to announce that from 2019 tax relief on mortgages would not only be significantly reduced but that the change will be retroactive for the previous three years. There would be an orange revolution! The Dutch wouldn’t stand for it.
Which brings me to the subject of today’s post, the great 30% robbery.
Doe maar normaal!
And so it came to pass that Henk and Ingrid, the Dutch gods of norms and values spoke unto Dutch Prime Minister Mark Rutte and said, “vexatious are the expats for they live in the Netherlands and pay less tax than the Dutch due to the 30% ruling en dat vinden wij niet ok! Nee, dat is niet normaal!”
Mark Rutte being a big fan of “normaal doen” immediately spotted yet another opportunity for blatant populism and decided to introduce a tax ruling that would retroactively rob expats of a benefit they were expecting to receive for eight years.
The 30% ruling tax benefit
The 30% ruling tax benefit applies to highly skilled workers recruited from outside the Netherlands. This rule wasn’t something thought up nor introduced by expats. The Dutch government introduced this ruling in order to attract highly skilled workers to the Netherlands. The facts are that in order to compete globally, the Netherlands needs the contribution of specialists from outside the country.
Cheese and whine
The 30% ruling tax benefit for expats has always been unpopular with Dutch employees. Indeed, when I first moved to the Netherlands, my Dutch manager, with almost Shakespearean pathos, spent a lot of time whining about how unfair he thought the 30% ruling was to Dutch people. His incessant bellyaching about this subject almost moved me to tears. Of laughter. No doubt he’ll be breaking open the frozen bitterballen to celebrate the fact that from 2019 the 30% ruling will be arbitrarily reduced from eight to five years for all current recipients of this benefit.
Let’s make something clear. In modern economies, tax rules change all the time. What’s unusual and downright disgusting about the 30% ruling policy change is that it will be applied retroactively to people who were led to believe that they would receive it for eight years. Now I’m 100% sure that there’ll be some Dutch people who will respond to this with the old and trusted saying of “if you don’t like it here, rot op naar je eigen land”. Which in many cases I’m sure will occur. However, there are people who made long-term financial commitments based on the expectation that they would continue to receive the 30% ruling for eight years, not five.
The impact of the policy change
Research on the impact of the 30% ruling policy change carried out by the International Community Advisory Panel shows that 56% of the first 3,000 expats who took part in the online ICAP survey said the proposal had damaged their trust in the government while 32% said the change made it likely they would not work in the Netherlands for more than five years, despite having originally planned to stay longer.
Over half the respondents said they would lose €750 to €1,500 a month when they stopped benefitting from the ruling and one in five would be €500 to €750 a month worse off.
Call me a cynic but
The impending financial distress that will affect a lot of expats from 2019 really won’t bother the majority of politicians or members of the Dutch public. In recent years it’s become quite common in the Netherlands to blame expats for all sorts of things:
- Rental prices rising in Amsterdam or elsewhere? Blame the expats!
- The cost of buying homes rising in the Netherlands? Blame the expats!
- Zwarte Piet isn’t black anymore? Blame the expats!
- Can’t get a date on Tinder? Blame the expats! 😉
The reality is that expats are pretty much regarded as overprivileged foreigners who are making life more expensive for the Dutch. A lot of people will be happy to see the back of us. They’ll also be disappointed when they see that the exodus of lots of highly skilled expats won’t make a difference to the rental or purchase prices of property in the Netherlands. The people responsible for the high prices are actually Dutch investors looking to squeeze every last cent out of their investments. Including making up the most bizarre excuses not to return the rental deposits of expat tenants.
Cry me a river
Since the change to the 30% ruling tax benefit was announced, a number of expat groups have been formed to lobby against the retroactive change that will come into effect in 2019. For example United Expats of The Netherlands.
They’re taking a positive approach to the legislation changes and you can follow all of the latest information related to this in their Facebook group. I wish them all the best, however, I’ve witnessed a lot of schadenfreude on social media from Dutch people happy with the proposed changes. The harsh reality is that expats are not able to vote in national elections in the Netherlands, therefore have little political power, so are an easy target for the increasingly populist stances taken by Dutch Prime Minister Mark Rutte.
The changes to the 30% ruling, especially the spiteful removal of the benefit from people who expected to have it for eight years, is quite simply a cynical political decision that will play well with Dutch nationalists and those who possess antipathy towards expats.
The reality is that a lot of expats, especially homeowners will struggle financially as a result of the proposed changes. But hey, let’s put politics before people.
Plenty of expats were hurt during the writing of this post.