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Answers to questions about the proposed changes to the 30% ruling

The State Secretary of Finance has answered questions from political parties about the proposed changes to the 30% ruling. For me the answers are very unsatisfactory. His answers indicate that he will not adjust the proposed changes. Below I will discuss the questions and the anwers from the State Secretary. My comments will be between the answers. I hope it is clear which part the State Secretary said and which part is my opinion. But to confirm, I basically disagree with the State Secretary and believe that all proprosed changes should not be accepted.

What are the consequences for the knowledge migrants with specific expertise who don't reach the required salary level? What is the unwanted use of the ruling for which the salary requirement is introduced? What will be the consequence for the number of knowledge migrants who will come to the Netherland? Can you measure specific knowledge based on salary?

During time usage of the 30% ruling has grown. In 2002 32,000 employees got the 30% ruling, in 2009 this had grown to 40,000 employees. Seems good to me, The Netherlands seems to attract more knowledge workers. No says the State Secretary, the number has grown due to the infestation of the term "specific expertise" in practice, also due to court cases about this. There is no information given about the court cases. Why is the practice not changed? Something seems to go wrong, but instead of changing practice the State Secretary just decides to change the rules. He states that the ruling is granted to employees who don't have an higher education but an "average" education. The ruling is granted to employees who don't have the specific and scarce knowledge and experience which the ruling aims to reach. Ah, so either the requirements are not right or the requirements are not checked properly. But it seems to difficult to change the requirements so just an income requirement is introduced. As if somebody with a high salary immediately has specific and scarce expertise. Why not adjust the education requirement? In the past the requirements were created as such that there was room for discussion. The Supreme Court confirmed this and stated that the rules leave room for interpretation which meant that not all requirements had to be met but that one had to look at the "overall picture". So a shortage in education could be compensated with a long relevant work experience. Same with football players. Many of them focused entirely on football and not on education. Now it is assumed that the many years of strict training can be seen as education on higher level. So for football players exemptions are made. Exemptions like this make the system fall apart. Be strict about the requirements and it will all work fine. Change the rules as such that all requirements must be met. But this seems to be too difficult. A salary requirement will make it all simple... Frightening that our government doesn't understand its own rules anymore.

The effects of the salary requirement will be small according to the State Secretary. Instead of using the 30% ruling an employer can also reimburse the real extra territorial expenses. As if an employer can just push a button so that the calculations are made immediately, are the same for each incoming employee and also cost neutral for the employer. The 30% ruling is now part of the total package offered to the employee, if the real expenses are reimbursed then this reimbursement will be paid on top of the agreed salary. So it will cost the employer more. Or the reimbursement will be part of a so called "cafetaria system". But an employer nor an employee will know upfront what the extra territorial expenses will be. These costs can show up suddenly. How should an employer deal with this? Especially since any reimbursement must be based on a receipt showing the payment or based on publicly available information. At the moment the agreed salary is reduced to 70% in the employment contract with a top up with the 30% tax free allowance. Once the tax free allowance is removed the employee will not accept the 70% salary anymore since he will never know in advance what the real extra territorial expenses will be. Also a company pension is linked to the taxable salary. So if the taxable salary goes up due to this, also the pension base will be higher leading to higher pension premiums. Another cost for the employer. So more costs and more work for the employer, higher salary demands from the employee and the State Secretary just says that there will be no effect. But isn't that the standard reply from the Dutch government: there is no problem, don't worry nothing will change.

What is the unwanted usage of the 30% ruling?

The State Secretary doesn't want that persons who left the Netherlands just more than 10 years ago can come back to the Netherlands and claim the 30% ruling (again). Although it would be discrimination to exclude Dutch nationalities from the ruling he confirms that the unwanted use sees on people who were born in the Netherlands. Once born in the Netherlands, the Netherlands is your home country and coming back to your home country will not lead to extra territorial expenses. As if somebody could not have changed his live in such way that another country has become the new home country. What if a Dutch person is married in the US, has worked there for 15 years, got children there and is transferred by his US employer to the Netherlands to work here for 3 years? The State Secretary now states that the Netherlands are still his home country, he will not have extra territorial expenses and therefore should not get the 30% ruling. Irrelevant is that he will have a property in the US, family in the US etc. Proposed change to reach this is to change the period of stay outside the Netherlands from 10 to 25 years. Just a way to convince Dutch employees working abroad not to come back to the Netherlands.

What may happen? Employees are transferred to a company within the group which is based in for example Belgium instead of the Netherlands. These employees will also work for the entity based in the Netherlands but will not be on a Dutch payroll. So these employees will stay out of the Dutch system, will pay tax and premiums social security in Belgium and use the expat benefits there. In this situation the Netherlands will not get anything anymore, even less if the Belgium entity invoices the Dutch entity for the income. Ok, this may not be according to the rules, but one knows that employers can be (and are) inventive and it is clear that the tax authorities will not be able to check everything especially since their workforce will be reduced. It is not that I support these actions, totally not, but in an international environment companies may be willing to take the risk.

Other unwanted usage is the use of the 30% ruling by employees living just across the border. If these employees will not relocate they will not have extra territorial expenses and therefore they should not get the 30% ruling. That is a point, however it is not common for every employee to go working in another country, not even if it is not far away. Looking at the Dutch law which will become applicable, the high tax rates etc. employees on a higher level may not be very convinced to come to the Netherlands. But as said, the State Secretary has a point here. However the change can work out unfair. The proposed distance from the Dutch border is 150 km. This means that the entire UK is safe, there is only a very very small part of the UK less than 150 km away from a point in Zeeland. Was it done on purpose? On the other hand entire Belgium will be affected. All places in Belgium are less than 150 km away from Dutch border. What if an employee is living in Brussels, but works in Groningen? Distance is over 300 km. So this person will have to arrange a place of living in the Netherlands and be confronted with double costs, but he won't get the 30% ruling. Brussels-Amsterdam is also more than 150 km. Looking at traffic, employees may decide to stay in Amsterdam or use a plane to travel to Amsterdam. Extra costs just because of moving between the two capitals. Still no 30% ruling. Consequence: Philips or ASML in Eindhoven, the brainport of the Netherlands, may not be able to attract Belgium employees or DSM may not be able to attract German employees from the Ruhr region anymore.

I have placed more comments later in this blog.

What is the usage of the ruling?

Number of 30% applications granted

2002: 8,000
2007: 10,407
2008: 13,124
2009: 10,967
2010: 11,233
2011: 8,093 (Q1+Q2+Q3)

2002 seems an estimate to me, I wonder whether it is accurate. If you compare figures this should not be done if a figure is not certain.

Main groups who got the 30% ruling in 2011

Job rotation: 1,143
Topmanager: 129
Scientist: 619
Know-how: 2,818
Productspecialist: 379
Teacher international school/employee international organisation: 17
Diverse (sporters, artists, pilots): 37
Others: 2,951

Total: in 2011: 8,093

It is not known how this will look like once the changes take effect. This is or can't be investigated.

Also the budget effects are provided but I will not discuss this here. Question is whether the savings will be reached. Negative budget effects are not given. So only positive news is given, not the bad news.

Why was the 30% ruling created?

The main reason for creating the 30% ruling is the positive effect it has to the Dutch establishment climate. It has been proved that the 30% ruling is highly appreciated by organisations and companies which want to establish itself in the Netherlands. Research of The Ministry of Finance proved that the 30% ruling is one of the most imporant elements of the Dutch establishment climate. The fact that the 30% ruling is of influence for the choice in which country a company is established is that other countries have introduced a similar ruling for expats in the mean time.

Research has shown that Belgium, France, UK, Denmark, Sweden, Finland, Portugal, and Austria have special tax rulings for expats. Of course they all differ. But they have benefits. All for a certain period, mostly shorter than the Netherlands though.

If the 30% ruling is so important and other countries have similar arrangements what would be the benefit of changing it to a less interesting ruling? The government agrees that it is very beneficial, so wants to make it worse. I don't understand. Only the expected saving is given, not the loss of income due to companies who will not come to the Netherlands anymore. This is very strange. Is this the "average" mentality in the Netherlands? Average is good enough. When something goes well we should adjust the rules so that it goes average?

What will happen with exisiting declarations?

Exisiting declarations will remain granted. But not all. An employee who reaches the first period of 5 years after 1 January 2012 will be confronted with the new requirements. At that moment, so the day the first 5 years passed, he must meet the requirements (except the 25 years period outside the Netherlands). Of course this needs to be checked by the tax authorities, but I assume the tax authorities will be instructed to perform these checks automatically. If the 5 years period passed before 1 January 2012 he will be safe, even if he changes employer after that. So if an employer has an employee who was hired on 5 January 2007 who currently has a salary of € 60,000, this employee will lose the 30% ruling on 5 January 2012 unless the salary is raised. Or if the employee was hired from Belgium. Short term action is then required.

How is the salary calculated looking at the salary requirement?

Salary will be the normal wage, plus depending payments like a bonus, profit share or commission. These depending payments are not known in advance, so question is how this will be calculated. Will someone lose the 30% ruling if it turns out at the end of the year that the required salary was not reached? Will the salary requirement be reduced pro rata if the employee doesn't work in the Netherlands the whole year? What if he works on different days, which change every week, while on the other days he works for the company in another country? His total salary will then be above the salary level, but the part in the Netherlands below the level. So by working in two countries a benefit is missed?

What will be the consequences for universities?

In general teachers, researchers and professors at universities earn less than what they could earn as an employee of a commercial company. Expected is that 85% of the employees of universities who currently have the 30% ruling will not get it anymore or lose it. This is somehow accepted. Only a lower salary requirement of € 26,605 is created for promovendi younger than 30. The period of promotion in the Netherlands will also not taken into consideration to determine whether he is recruited from abroad.

So a lower salary for young employees is introduced for universities but unlike the Knowledge Migrant Scheme this lower salary is not applicable for other employees as well, working for commercial companies or non-profit organisations/ Is this fair?

Is the 150 km requirement according to EU law?

The 30% ruling sees on employees. So relevant is whether the changes will not affect the free movement of employees within the European Union. Stated is that the 150 km requirement is not a direct discrimination based on nationality. With regards to indirect discrimination based on nationality it is noted that the relevant article in the EU treaty was meant to prevent that foreign employees or treated less favourable than resident employees who had the nationality of that state. The changes will affect Belgian and German employees earlier than for example Italian employees. However the question should be asked whether the situation is equal which should be treated equally. The State Secretary has the opinion that the situations are not equal, saying that Belgian employees for example live so close to the Netherlands that they will not have extra territorial expenses. This is questionable. See my earlier comment. And what if an Italian employee is transferred to Belgium to work there for 6 months and then transferred to the Netherlands? He was staying in Belgium when he was transferred to the Netherlands so he will not meet the new requirements unlike he would have been transferred directly from Italy to the Netherlands. So it does affect the freedom of movement of employees within the EU.

On the other hand the State Secretary says that the 30% ruling is just an extra benefit which may be used if an employee comes to the Netherlands. So it favours the free movement of employees. Yes sure, but then the requirements should be the same for each person in the EU.

Is the 150 km requirement fair?

Well, 150 km is just a choice. It may not always be fair, but that's just what it is, according to the State Secretary. Yes, he is right, but he should provide better arguments.


The State Secretary has answered questions from political parties. My conclusion is that the answers were vague, not very specific and not really argumented. He admitted that the 30% ruling is very important for companies to decide whether they want to establish a branch in the Netherlands. Reducing the benefit will definitely hurt the establishment climate and affect the Dutch economy, long term. It is against the goal of the Ministry of Economy to make the Netherlands a real knowledge economy. Negative consequence are not calculated, only the possible savings. This is not a proposal our parliament should accept!

Expatax will keep fighting against these proposed changes.
Arjan Enneman
Managing Director Expatax BV
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Comments (4)
Comment by pmb on Sat, Jan 21st, 2012 at 4:00 PM
hello,i have a question related to the paragraph "what will happen with existing declarations?". my 5 years period passed before january 1st (actually 6 years have already passed in my case). based on what you say it seems that i will be safe even if i change job - are you completely sure? it seems like this matter isn‘t fully clear. in fact when you change job, you (and your employer) have to file a new application for the 30% ruling. therefore most people think that the new rules will apply on changing job (even if the 5-year period is already passed). among other things, if the new application is successful, the total duration should now be 8 years, no longer 10. what do you think?thanks in advance!best regards,pmb
Comment by arjan enneman on Tue, Jan 31st, 2012 at 7:34 PM
Yes, it is indeed a difficult issue. A lot still has to be worked out in detail during time. However I do believe that when you change employer you will not be confronted with the new requirements if you already had the 30% ruling for 5 years on december 31, 2011. The new text of the ruling mentions that the new employer will be seen as the original employer which you had on december 31, 2011, so that actually for the ruling it is not recognized that you changed employer. But as said, everything is not totally clear yet, so you may want to file an application with the tax authorities first and wait for the decision before you actually decide to change jobs. In dutch (specifically under 2.): Artikel IV 1. Ten aanzien van een werknemer ten aanzien van wie de bewijsregel op 31 december 2011 wordt toegepast: a. is artikel 10ee van het uitvoeringsbesluit loonbelasting 1965 zoals dat luidde op 31 december 2011 van toepassing ingeval op 31 december 2011 niet meer dan 5 jaar van de looptijd van de bewijsregel is verstreken; b. is artikel 10ee van het uitvoeringsbesluit loonbelasting 1965 niet van toepassing ingeval op 31 december 2011 meer dan 5 jaar van de looptijd van de bewijsregel is verstreken. 2. Ingeval de werknemer, bedoeld in het eerste lid, na 31 december 2011 door een andere inhoudingsplichtige wordt tewerkgesteld, wordt die inhoudingsplichtige voor de toepassing van het eerste lid geacht dezelfde inhoudingsplichtige te zijn als de inhoudingsplichtige door wie de werknemer op 31 december 2011 werd tewerkgesteld.
Comment by berclo on Tue, Feb 4th, 2014 at 4:17 PM
I started to work in the NL on Jan 2008. So on December 31st I had only matured 4 years. What happens if I change employer this year 2014? Will I have still 4 years of 30% ruling or only 2 left?
Comment by arjan enneman on Fri, Feb 21st, 2014 at 7:17 PM
Berclo, since you got the ruling before 1 January 2012 you still fall under the old rules when it comes to the term of the 30% ruling. It was granted to you for 10 years and that stays 10 years and not 8. Changing employers doesn
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