27 October 2023, by Abi Carter

As expected, the House of Representatives has passed an amendment to reduce the 30 percent ruling, a tax advantage for highly skilled migrants working in the Netherlands. The savings made on the scheme will be used to reduce interest on student loans.

MPs vote to significantly limit 30 percent ruling

In a vote late last night, the last day of parliament before the general election, MPs voted through a measure to significantly limit the scope of the 30 percent ruling. The amendment was proposed by Pieter Omtzigt and backed by major political parties including ChristenUnie and GroenLinks / PvdA.

As it currently stands, highly skilled migrants (defined as those who meet certain income thresholds) can apply for the ruling to have 30 percent of their salary made exempt from taxation. They have to meet other prerequisites, for instance that they have moved to the Netherlands specifically for a job that could not be filled by local candidates. 

In 2019, the Dutch government shortened the maximum validity of the ruling from eight years to five, but now with this new amendment Omtzigt and his backers seek to go further: from January 1, 2024, the ruling will still apply for a maximum of five years, but the 30 percent saving will only hold for 20 months. After that, 20 percent of the employee’s salary will be exempt from tax for the next 20 months, and then 10 percent for the final 20 months. There will be a transition period put in place for people who are currently claiming the tax break.

Omtzigt says 30 percent ruling is responsible for Amsterdam housing crisis

Omtzigt, who left the Christian Democratic Appeal in 2021 and in August 2023 founded a new party called New Social Contract, is currently ahead in the polls. He has long been campaigning for the 30 percent ruling to be reduced, and in his election manifesto has called for it to be scrapped entirely. 

In particular, he blames the 30 percent ruling for the tight situation on the housing market in cities like Amsterdam, saying that it allows expats to pay more rent than others, pushing up rates and pricing locals out of the market. 

He said that the changes to the scheme voted through last night would ultimately yield savings of almost 200 million euros per year. That money is earmarked for reducing the interest rate paid by students on their loans. The interest rate on these loans is about to increase from 0,46 percent to 2,46 percent.

Image credit: Nancy Beijersbergen / Shutterstock.com

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