Looking just at the cost of the 30% ruling is a one-sided view

After 10 years, this might be an appropriate moment to review and evaluate the 30% ruling in its current form, write Eric Jansen, Lita Mannoe and Brian James.

The 30%-ruling, the so-called expat-ruling, is meant to compensate the extra costs incurred by employees hired from abroad whom have specific expertise that is scarce on the Dutch labour market.
In stead of compensating the actual costs, the employer can choose to remiburse a fixed amount (whereby 30% of the wages is regarded as a tax free cost reimbursement). In its current form, the ruling has existed since 2001, however, the facility was introduced shortly after the Second World War.
Once in a while the news reports on the facility and its right of existence. It is noteworthy that the focus then is always on what it “costs” the Treasury. A one-sided view in our opinion.
For example, you never hear anybody ask what the Treasury gains from the ruling. A savings of €25m automatically implies a tax remittance of around €58m. Moreover, no attention has, for example, been paid to the gain for the Treasury through indirect taxes (VAT, excise duty, etc.) as well as what the use of their expertise contributes at corporate level towards the Dutch economy.
In addition, the Government continues to promote the Netherlands as the ideal place for foreign companies to establish business as well as further development of the knowledge economy (‘kenniseconomie’).
This introduces the need to incorporate these types of – temporary – tax facilities. The Government made a clear choice in this respect. The fact that the ruling has existed in various forms for almost 70 years now confirms – in our view – that it ultimately provides enough gains for the Treasury.
Abuse of the ruling by Dutch nationals is not an issue. The ruling itself has an anti-abuse measure in the form of a reduction of the maximum period for periods of previous stay in the Netherlands.
Therefore, Dutch nationals do not “just” qualify for the ruling. A Dutch national must be sufficiently disconnected from the Netherlands in order to be eligible for the ruling.

Generally speaking, the individual concerned must be out of the Netherlands for at least 10 consecutive years and they must meet the other requirements for the ruling as well (scarcity on the Dutch labour market/specific expertise).
Excluding a person from the facility only on the basis of his or her nationality would be an unjustified discrimination. That is not possible. The Supreme Court decided years ago that excluding individuals whom have Dutch citizenship is not allowed.
In the meantime, the ruling has existed for more than 10 years in its current form. Perhaps a good moment to review and evaluate.
Eric Jansen (partner), Lita Mannoe (director) and Brian James (senior advisor) on behalf of Grant Thornton Expatriate Services B.V.

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