Fewer high-skilled workers expected

June 18, 2024


The recent tightening of the Netherlands' 30% tax ruling for expats is anticipated to lead to a significant decline in the number of skilled migrants, according to a new report by SEO Economic Research. Commissioned by both houses of the Dutch Parliament, the evaluation study titled "Expertise, Costs, and Choices" estimates a reduction of about 10 to 15 percent in the influx of highly educated foreign workers. 

New tax policy

Previously, the 30% ruling allowed foreign employees to receive 30% of their gross salary tax-free for a duration of five years. However, amendments initiated by GroenLinks-PvdA, Volt, ChristenUnie, and Pieter Omtzigt—now leading the New Social Contract (NSC)—have significantly cut back this benefit. Under the revised policy, expats can only claim the full 30% tax exemption for the first 20 months, followed by 20% for the next 20 months, and 10% for the final 20 months. 

Financial implications

The report underscores that the 30% ruling generates more revenue than it costs, as it attracts high-income expats who contribute substantially to the tax base. Researchers caution that diminishing this incentive could have adverse effects on the national budget and make the Netherlands less attractive for corporate investments. 

Concerns

Approximately 110,000 expats benefited from the 30% ruling in 2022. Major business organizations such as VNO-NCW, MKB-Nederland, and FME argue that the scaled-back tax relief threatens the future economic competitiveness of the Netherlands. Ingrid Thijssen, Chair of VNO-NCW, stressed that maintaining wealth and high-paying jobs relies on attracting top global talent, particularly in technical fields where other countries also offer similar incentives. 

Theo Henrar, Chair of FME, emphasized the importance of the tax benefit in keeping Dutch companies innovative and competitive on the global stage. He stated, "Technical talent from abroad is essential for our businesses, and the 30% ruling is crucial to making the Netherlands an attractive destination.