Anger grows over Dutch government change to expat tax break

As the controversy rumbles on over the Dutch government’s shrinking of the popular eight year 30 per cent tax break to five years, the majority of expats still believe it should be only for new arrivals.

The Dutch government’s recent announcement of a reduction in qualifying years for its 30 per cent expat tax break took the foreign community by storm, with many venting their anger online. Others were more circumspect, but still believed the new five-year rule should only apply to newly-arrived expatriates as it could cause devastation to long-stay expats with mortgages and other financial commitments. A change.org petition has 10,000 signatures so far and, if social media is to believed, will likely garner a good few more.

The basic behind the original carrot on a stick was to attract the brightest and best by giving them a little tax-related assistance with the costs of relocation, schooling expenses, travel back to the home country and the lack of a partner’s income to help pay the bills. There’s no doubt that expats found the offer very attractive and chose the Netherlands over other countries as a result. Dutch citizens who’d lived abroad for over 10 years were also included, tempting a good few to bring their talents back to their home country.

At the present time, it seems the only people who are likely to benefit from the growing expat anger are tax advisors, who’re due to become very busy over the next few months attempting to sort out wrecked financial plans, especially as the reason given by the Dutch government was that the eight year term was simply ‘too generous’. It also compared other countries’ similar schemes including Denmark’s, which caps its maximum tax rate at a reasonable 26 per cent for a period of five years. France, Belgium and Spain have similar incentives.

However, the really stupid thing to do was to decide the ruling should be retroactive, thus dumping expats’ careful financial planning in the bin for no good reason. If nothing else, it’s a grossly unfair decision involving many thousands of euros a year, and should be fought. A number of comments by expats themselves point out that, should the Netherlands decide it wants to attract top talent, its companies should be prepared to pay top wages rather than get away with less and let the government take the strain by forcing the Dutch taxpayer to underwrite their meanness.