End To Expat Tax Benefits In The Netherlands

The tax-free portion of income Expats in The Netherlands have enjoyed up until now is set to come to an end.

London, UK (Pryce Warner International) November 15th, 2011 – Deputy Finance Minister Frans Weekers recently announced plans to change the 30% tax rule for Expats.

Originally introduced as a means to encourage employers to bring in skilled Expats, it presently means Expats only pay tax on 70% of their salaries. This was designed to help individuals deal with the cost of emigrating.

The tax threshold also helped encourage Expats migrate in larger numbers as The Netherlands is considered less desirable a country to move to due to its high tax rates.

As so many individuals have opted into the regulation, from January 1, 2012, the Dutch government have decided that only those earning over €50 619 will be eligible for the exemption. This is because those earning under that amount are not considered as contributing enough to the economy to be able to take advantage of the regulation.

Despite its high tax rates The Netherlands has proved highly popular with Expats over the past few years, partially due to the 30% regulation. This has also been due to the cultural similarities to many countries, progressive values, excellent healthcare and the high prevalence of English as a second language for most locals.

The proposals have met with strong opposition from several quarters. The primary criticism is that it will reduce the amount of people migrating to The Netherlands and that some current Expats may decide to leave. One commentator explained that every Expat in The Netherlands creates 1.5 jobs for locals and that this would mean a loss of 150 000 jobs if 100 000 Expats left the country.

David Harra, a Senior Market & Investment Analyst with Pryce Warner International, a Financial Services Provider for Expats, commented: “While this will be a blow to some Expats, it’s debatable whether or not this will significantly reduce the amount of people moving to The Netherlands. Expats have often spend a great deal of time settling in and building a life and that is something that people will not throw out the window due to a tax increase, especially with economic prospects elsewhere unlikely to be any better. More confusing is the decision to have people over a certain amount keep the benefit, the logic presumably is to give lower earning Expats an incentive to remain in the country and earn more. Whether or not this will work in practice remains to be seen.”

Pryce Warner International Group provide International Asset & Investment Management, Independent Financial Advice & QROPS Overseas Pensions.

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By: Aneil Fatania
Financial Editor
Pryce Warner International Group
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