Dutch tech firms set to lose out due to new expat tax rule

As the expatriate battle against the 30 per cent tax break changes hots up, Dutch tech companies are worried about losing their best people.

The Netherlands is now a hotbed for tech innovation, with the original tax break scheme mooted as one reason why so many highly-skilled expatriates chose the country as their permanent home and start-up hub. The sector relies on foreign talent, with the row over the government’s new tax break rules threatening to discourage new arrivals and encourage leading established professionals to leave for kinder destinations. The labour market’s tech sector is tight, and competition for the brightest, best and most innovative is huge.

Tech workers account for 14 per cent of the Netherlands’ entire labour force, with some 1.2. million employed and helping generate $35 billion in revenue on an annual basis. There are around 6,000 start-ups and scale-ups, the majority of which are going to be affected by what is basically a 25 per cent salary cut due to come into force next January. Industry, universities and companies in the sector are outraged by the decision, and thousands of expats are desperately attempting to re-jig their financial affairs whilst calls for a grandfathering clause are being ignored by the Dutch government.

Insecurity is now rife in a community which basically believed the Dutch government had a reputation for being fair-minded and encouraging as regards new businesses started by highly-skilled incomers. The fact that the government seems not to be concerned about the dilemma its move has forced on thousands of tech professionals is certain to have an adverse effect on new recruitment, in addition to persuading a good number of essential employees to seek positions elsewhere in the world. It’s not just expats who’re protesting the unfairness of the government’s decision, as eight of the Netherlands’ largest tech companies have already sent a letter to the Dutch finance minister protesting the move.