Expats in Netherlands Face Higher Taxes After House Votes to Shrink Benefit

April Roach
·2 min read
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(Bloomberg) -- The Dutch parliament approved a proposal to cut a benefit that exempts 30% of an expat’s salary from income tax for five years.

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The plan reduces the 30% exemption to maximum of 20 months; expats will then get 20% exemption for the next 20 months, and 10% for the remaining 20 months, according to the proposal approved by the lower house of the bicameral parliament of the Netherlands early Friday.

The bill, which was led by popular lawmaker Pieter Omtzigt, aims to raise money to lower interest payments on some student loans and still needs to be approved by the Senate before it can be implemented. If approved by the upper house, the changes will take effect from next year.

The proposed amendment comes after the government last year introduced a maximum salary threshold for expats who can take advantage of the tax break. The cabinet also decided in 2018 to reduce the tax benefit to five years from eight. Previous amendments to the benefit drew the ire of dozens of Dutch technology companies that rely on foreign talent. Companies including ASML Holding NV and Adyen NV last year called on the Dutch government to maintain the tax break in its current form.

The proposal fails to consider the long-term consequences for competitiveness in the Netherlands, ASML spokesperson Monique Mols said in an emailed statement on Friday. The Netherlands is putting itself at a disadvantage in comparison to seven other countries in Western Europe that have similar or better regulations, she said.

“As long as there is not enough talent available in the Netherlands, we are forced to bring in talent from abroad to tackle the challenges we face,” Mols said.

Read More: Dutch Tech Firms Warn They’ll Lose Out If Expat Tax Break Goes

Dutch politician Omtzigt, whose newly-launched party has surged in popularity ahead of next month’s elections, is calling for a drastic cut in migration as he seeks to tackle the issue that toppled the previous government. The Netherlands has been providing migrants with “huge tax benefits,” Omtzigt said earlier this week, referring to the so-called 30% rule for expats. “That’s basically just inviting them,” he said.

Migration is a hot-button issue in the run up to elections on Nov. 22 after Prime Minister Mark Rutte’s coalition collapsed in July amid infighting over refugee policy. Omtzigt’s upstart New Social Contract is among the top two most popular parties, alongside the center-right People’s Party for Freedom and Democracy, or VVD, according to recent election polls. Justice Minister Dilan Yesilgoz-Zegerius, who’s taken over from Rutte as leader of the VVD, has also promised to crack down on migrants.

(Updates with ASML statement in the fourth paragraph)

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