30 percent ruling in the Netherlands faces further cuts

Some details about the Dutch budget for Prince’s Day have been leaked and the 30 percent ruling is on the chopping block once again. The caretaker government plans to make further cuts to the expat tax break. 

Dutch government plans cuts to expat tax break

The 30 percent ruling has been the subject of debate many times in election manifestos and budget talks. As Budget Day approaches on September 16, the tax break is being revisited yet again.

As it stands, the 30 percent tax ruling allows a select group of highly-skilled migrants who move to the Netherlands for work to claim the first 30 percent of their income as tax-free during the first five years of residency. During last year’s budget, the cabinet already agreed to slightly reduce the tax break from 30 percent to 27 percent in 2027.

According to De Telegraaf, the outgoing government plans to reduce the tax break, but it is uncertain by how much. The aim of the reduction is to generate 20 million euros annually for the national budget. 

The Netherlands goes back and forth over 30 percent ruling

In 2019, the Dutch government shortened the validity of the ruling from eight years to five and then, in 2023, passed an amendment to phase out the tax break completely. However, the government then U-turned on this decision, choosing instead to keep the tax ruling, but just reduce it slightly from 2027.

A report released last year by an economic research bureau revealed that cutting the 30 percent ruling could damage the Dutch economy by reducing the number of highly-skilled workers who help fill key jobs in the Netherlands. Further details about the planned cuts will be formally presented to the public on Budget Day.

As the cabinet is in caretaker role ahead of the general election in October, it is limited in what it can do. Some of the other plans for the budget leaked include keeping fuel taxes down by not bringing back red diesel and allocating more money to keep the cost of energy low.