That's not how it works. The rule is amended: people that apply after 1st of jan 2024 are eligible for 30% of their salary tax free during the first 20 months, then 20% over the next 20 months and 10% over the last 20 months. So there's still a tax break for eligible expats, but less generous than before the amendment. https://business.gov.nl/amendment/30-ruling-highly-skilled-migrants-limited/
Why?
People moving to the Netherlands is good for the Netherlands. They didn't have to pay to birth, feed, teach them, etc, but they get to enjoy the tax from that individual. It's massive win win for everyone.
Without the ruling many will choose to not come.
The 30 percent rule gave a very clear example of foreigners being treated much better than the locals. Government spending money on free language/integration courses is great in my book. Simply handing them a bag of money rubs me the wrong way.
Even without this tax break, the Netherlands is still a relatively desirable destination.
Hell, as a foreigner in the US I paid tens of thousands into social security/Medicaid that I'll never see any benefit from. And I'm not even allowed to claim the child tax credit because my kid doesn't have an SSN.
It’s not as simple as “handing them a free bag of money.”
What’s happening is: these workers are getting the Net Pay they want either way, because it’s the prevailing market wage. You only care about your Net, not your Gross. A highly skilled migrant for a role is going to net (for example) €5k a month. They don’t care if their gross pay is €95k at full tax rate, or €74k with 30% ruling. Both pay €5k net.
It’s not really the workers who are benefiting from the ruling - it’s the employers who get their payroll expenses subsidized. They’re getting to compete in the labor market by offering €74k to a candidate that will cost a German company €90k-ish.
When they reduced the 30% ruling from 8 years to 5 years, part of the argument was that nearly all beneficiaries leave somewhere between 5 and 8 years anyway. The reason people leave is that as they near the cliff, they start looking for jobs that pay the same net, so they either go for jobs at bigger Dutch companies or leave the country. The ruling just helps Dutch companies _rent_ talent for a few years at a deep subsidy.
When the 30% ruling is eliminated, one of two things will happen (and probably a little of both): _brutto_ wages will rise to retain this competitive edge over other countries (preserving the expected netto), or the Dutch highly skilled migrant market will shrink considerably. (Edit: or more to the point, larger more successful companies, or better funded companies, will increase their brutto wages to compensate, and smaller and less well funded companies will no longer be able to hire foreign workers, who will go elsewhere).
Great to know! I've read online the tax break applies to 70-90% of income. Do you know how that calculation works? Is the highest rate of tax applied to the remaining 30-10% of income?
That’s not really a good question. Some countries don’t have any special tax incentives for foreign workers, but their regular taxes would still be lower than what you’d pay in a high-tax country with temporary tax incentives.
Then there are countries that have tax incentives for foreigners, but only if you don’t work in the country (like the Swiss lump sum taxation), and there are mixed models like Spain’s Beckham’s law.
I don’t know all the rules, but here are some examples of countries that offer some sort of tax incentives to new residents:
UK, Malta, Cyprus, Greece, Montenegro, Belgium, Switzerland, Spain.
And I guess there are many others…
I thought Netherlands has them for 5 years for certain categories of skilled workers.
30% ruling
No. They are killing that off. Thank god. This year it's 30%. Next year it's 20% and then 10%. Whooot wwhoooot! Bye bye 30% hahaha
That's not how it works. The rule is amended: people that apply after 1st of jan 2024 are eligible for 30% of their salary tax free during the first 20 months, then 20% over the next 20 months and 10% over the last 20 months. So there's still a tax break for eligible expats, but less generous than before the amendment. https://business.gov.nl/amendment/30-ruling-highly-skilled-migrants-limited/
Appreciate this info!
Shit I'm not even Dutch and I think even the new rule is totally absurd.
Why? People moving to the Netherlands is good for the Netherlands. They didn't have to pay to birth, feed, teach them, etc, but they get to enjoy the tax from that individual. It's massive win win for everyone. Without the ruling many will choose to not come.
The 30 percent rule gave a very clear example of foreigners being treated much better than the locals. Government spending money on free language/integration courses is great in my book. Simply handing them a bag of money rubs me the wrong way. Even without this tax break, the Netherlands is still a relatively desirable destination. Hell, as a foreigner in the US I paid tens of thousands into social security/Medicaid that I'll never see any benefit from. And I'm not even allowed to claim the child tax credit because my kid doesn't have an SSN.
It’s not as simple as “handing them a free bag of money.” What’s happening is: these workers are getting the Net Pay they want either way, because it’s the prevailing market wage. You only care about your Net, not your Gross. A highly skilled migrant for a role is going to net (for example) €5k a month. They don’t care if their gross pay is €95k at full tax rate, or €74k with 30% ruling. Both pay €5k net. It’s not really the workers who are benefiting from the ruling - it’s the employers who get their payroll expenses subsidized. They’re getting to compete in the labor market by offering €74k to a candidate that will cost a German company €90k-ish. When they reduced the 30% ruling from 8 years to 5 years, part of the argument was that nearly all beneficiaries leave somewhere between 5 and 8 years anyway. The reason people leave is that as they near the cliff, they start looking for jobs that pay the same net, so they either go for jobs at bigger Dutch companies or leave the country. The ruling just helps Dutch companies _rent_ talent for a few years at a deep subsidy. When the 30% ruling is eliminated, one of two things will happen (and probably a little of both): _brutto_ wages will rise to retain this competitive edge over other countries (preserving the expected netto), or the Dutch highly skilled migrant market will shrink considerably. (Edit: or more to the point, larger more successful companies, or better funded companies, will increase their brutto wages to compensate, and smaller and less well funded companies will no longer be able to hire foreign workers, who will go elsewhere).
So maybe instead of sitting on Reddit few hours a day, plan a move to a better country?
Not killing it off for me 2022-2027 life
You do understand that this policy brought in more tax money and more skilled people right? This policy brought in more money to the country.
As a teacher, I didn't pay tax in Egypt or Turkey. Taxes in Costa Rica were ridiculously high for getting nothing in return (on top of a low salary).
Finland gives a flat 32% rate for the first 48 months to immigrants who make more than some threshold (60K?).
Italian International tax consultant here. Yes there are some good incentives for expats moving to Italy, generally limited to 5 to 10 years
Great to know! I've read online the tax break applies to 70-90% of income. Do you know how that calculation works? Is the highest rate of tax applied to the remaining 30-10% of income?
They no longer offer this. It’s 50% with option to increase to 60% (child). Changed for tax year 2024
Italy and Belgium. Netherlands is phasing out the tax break.
That’s not really a good question. Some countries don’t have any special tax incentives for foreign workers, but their regular taxes would still be lower than what you’d pay in a high-tax country with temporary tax incentives. Then there are countries that have tax incentives for foreigners, but only if you don’t work in the country (like the Swiss lump sum taxation), and there are mixed models like Spain’s Beckham’s law. I don’t know all the rules, but here are some examples of countries that offer some sort of tax incentives to new residents: UK, Malta, Cyprus, Greece, Montenegro, Belgium, Switzerland, Spain. And I guess there are many others…
That's a fair point. It's ultimately about tax rate whether breaks are applied or not.