Has the 30% ruling reached the moment of it being expired? No, not yet. Is it under attack? Yes it is. Do we need to be worried? Not yet, depending who is in power.
30% ruling
The 30% ruling is a tax credit of 30% on the income earned by employment with a Dutch resident employer. The ruling is valid for an 8 year period and the sole purpose of this ruling is to attract foreign employees that can bring knowledge to the Netherlands. Knowledge we need to remain competitive in the world as a nation.
What would happen if the 30% ruling no longer exists?
We will become a nobody country from a development point of view. In size we are easily overlooked, but if also our tax rates cannot keep up with those of for instance in the United Kingdom, we have lost the battle.
Is the 30% ruling under attack?
Yes it is. The European Commission has investigated some time ago the aspects of the 30% ruling. Their opinion is that the ruling compensates more or too much than required. The European Commission have asked the Netherlands to act on their findings.
The Dutch Government is not too keen on adjusting the 30% ruling to a less interesting ruling, hence they have taken their time to come up with their own opinion. Their opinion is that the ruling is still very much in line with the aim for which it was invented. Hence no adjustment is required.
Do we need to be worried?
That depends on who you are asking. If you are asking the Netherlands Foreign Investment Agency (NFIA) , you should become slightly worried.
The NFIA is an organization to promote Dutch trade abroad. They can help Dutch companies with the promotion.
The NFIA has proposed to change the 30% ruling in a ruling for a shorter period of time, max 5 or 6 years. To increase the 150km line outside which you can apply and to introduce a maximum salary of EUR 100.000. How does that help promoting the Netherlands?
Moreover the NFIA states that the minimum salary requirement of about EUR 54.000 is not enough to support a family, hence a lot of foreign employees waive the opportunity to come to the Netherlands.
If the NFIA suggestions are becoming the adjusted rule, then basically EU employees are ruled out by the increase of the 150km line. The US employees will not move to the Netherlands if the salary cannot be higher than EUR 100.000. Moreover, most Dutch families do not earn EUR 54.000 and university employees certainly earn less. We therefore are very much surprised by the suggestions made by the promotor of the Netherlands, that families waive the possibility to come to the Netherlands. As if the cost of living abroad is lower.
Orange Tax Services
We work a lot with the 30% ruling and its employees. We notice that well educated and experienced employees who become for instance the CFO or COO of a company in the Netherlands earn a salary that is rather substantial here in Holland, but in line with what is paid abroad. That are exactly the power employees we need to develop to the next level. Adjusting the 30% ruling in any way will be very counterproductive. I hope the Dutch Government becomes creative again, like they were with the 30% ruling tax credit, to attacked the foreign knowledge we are so much in need of.
