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Dutch audit office claims 30% ruling for expats is outdated
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Dutch audit office claims 30% ruling for expats is outdated

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© 2025 IamExpat Media B.V.
© 2025 IamExpat Media B.V.
Jun 1, 2016
Thomas Lundberg
Born as a Swede in the Netherlands, this life-long expat has spent his time in Belgium, the United States and Amsterdam. He began his professional career as a regional news reporter in southern Michigan, where he developed an interest in writing about social issues and music. After moving back to Europe he mainly worked as an editor, copywriter and translator. Read more

After a critical report by the national audit office, the Dutch parliament voted to investigate the costs and effectiveness of the 30% ruling. A motion by Groenlinks and SP was accepted, calling for an inquiry by the government.

The Finance Minister stated earlier that he has no plans to abolish the tax benefit, but that it could be adjusted should that prove necessary.

The popular 30% ruling that many expats take advantage of in the Netherlands in order to pay less income tax is being called into question by the Algemene Rekenkamer, the national Court of Audit. The tax break, which some but not all internationals qualify for, allows for 30 percent of wages to be exempt from income tax. In 2014 it cost the Dutch government 700 million euros.

The original intention of the 30% ruling was to compensate highly skilled migrants for costs incurred while moving and settling in the Netherlands, so-called extraterritorial costs.

Boosting the post-WWII Dutch economy

The tax break was created after World War II to attract American multinationals to the Netherlands. The Dutch government wanted to attract expats with a specific expertise that was lacking among Dutch workers. The long-term goal was to improve the business climate.

Figures from the Rekenkamer show that every year the number of internationals using the 30% facility increases. Currently, about 52.000 expats in the Netherlands take advantage of the tax break, costing the government nearly 700 million euros in 2014. Slightly more than a quarter of that money goes to a small group of expats with an income in excess of 200.000 euros per year, NRC reports.

Effectiveness of 30% ruling poorly examined

A recent report by the Court of Audit calls into question how beneficial the ruling really is for the Dutch economy. It also states that the reason for the amount (30 percent) was never thoroughly explained by the State Secretary of Finance.

The audit office states that no one has ever investigated whether the ruling actually has the intended effect of attracting workers that offer something Dutch workers can’t. There also have been no studies about potential negative effects, such as unfairly crowding out Dutch employees.

Only expats who are seconded to a job in the Netherlands with a salary of at least 36.889 euros (2016 salary requirement) qualify for the tax-free allowance. The Finance Ministry, however, has not determined how many employees actually earn more than this limit (roughly the modal income) or have specific expertise.

The amount of the tax-free allowance (30% of gross salary) is also poorly substantiated, according to the report. While the allowance is intended as compensation for the additional costs foreign employees incur when living and working abroad, the actual additional costs have never been calculated.

Changes in 2012

The State Secretary of Finance amended the 30% scheme in 2012 in order to save 38 million euros in 2014. Long-term the government wanted to save 78 million euros per year starting in 2020. The report from the audit office states that it is unclear whether these targets have been achieved, and that in 2014, the ruling cost over 100 million euros more than in 2011.

Recommendations by the Rekenkamer

The Court of Audit is asking various ministries to begin periodical checks of the effectiveness and consequences of the 30% ruling, and to begin informing the Dutch government on an annual basis.

They want to find out whether it:
› attracts people with scarce expertise to the Netherlands
› contributes to the business climate in the Netherlands
› crowds out Dutch workers

Furthermore, the audit should also consider the level of the salary requirement and of the tax-free allowance. The role of the Court of Audit is to check whether the Dutch government spends public funds and conducts policy as intended.

By Thomas Lundberg