The Dutch government is currently undergoing the lengthy process of putting together a spring budget statement, labeled “voorjaarsnota”, which outlines the new cabinet's finances and budget plan. Reports suggest that various tax benefits—including the 30% ruling for expats in the Netherlands—could be scrapped under its changes as part of the government's plan to make up for additional energy and defense expenditure.
The Netherlands is known by expats for having a good quality of life as it secured a spot in the top 10 countries in 2020, making it one of the best countries to live and work in 2021 and beating the likes of Germany, France, and the United Kingdom, according to Blacktower Financial Group. However, due to growing costs resulting from the energy crisis, the war in Ukraine, and rising inflation rates, the Dutch government will have to find an additional 10 to 15 billion euros to recover its losses, and that could impact expatriates.
The Dutch government was undergoing the lengthy process of putting together a spring budget statement, labelled “voorjaarsnota”, which outlines the new cabinet's finances and budget plan last month. Reports suggest that various tax benefits—including the 30% ruling for expats in the Netherlands—could be scrapped under its changes as part of the government's plan to make up for additional energy and defense expenditure.
The government has decided to cap rather than scrap the 30% ruling which some people who move to the Netherlands to work are able to benefit from. The cut is one of a package of measures the government introduced in the spring statement and will help pay for higher spending on defence, the state pension and compensation for savers. The 30% ruling, which gives claimants the right to 30% of their salary tax-free, will now only apply to a maximum of €216,000 in gross income, so that people earning more will pay the full tax rate of 49.5% on the excess.
On the other hand, the Netherlands has one of the lowest unemployment rates in Europe. According to Statista, the unemployment rate in the Netherlands was just 4% in 2022. In contrast, Spain has a 15% UR according to Focus Economics. Natalia Ramos, a Brazilian journalist expat living in the city of Utrecht in the Netherlands, comments that this means that probably all fields present opportunities, although the revision of the 30% rule can affect expats as she explains its benefits. “If certain requirements are met, a company can apply for it, so they cap the employees' taxes at 30% for what I believe is a period of 4 years. Taxes are very high here for employees, so it is a great incentive to attract foreign talent.”
How expats are impacted
In order to apply the spring budget, parties might scrape various tax benefits for Dutch and expat businesses and entrepreneurs and are considering introducing new taxes on wealth. In addition to these plans, however, NOS reports that ministers could scrap the 30% ruling - the tax benefit that means that 30 percent of a salary is tax-free. The Dutch Prime Minister, Mark Rutte, announced that coalition talks about the new budget were coming to an end, for the time being, giving the parties the opportunity to discuss the plan with members of the opposition. The recovery budget plan is for the discussion to be resumed this month before the final plan is presented to the House of Representatives (Tweede Kamer) in June.
Rutte emphasized that an agreement can be reached, but refused to provide any details about the options that were currently on the table. "Many variants are still conceivable", he told the Dutch press.
Financial benefits and drawbacks of living in the Netherlands
According to the consultancy firm PWC, the Netherlands is a country with several benefits for expats. They state its pro-business climate, strategic location, stable legislative system, highly educated multilingual workforce and superior infrastructure as just some of the many advantages of doing business in the Netherlands.
However, the cost of living is an issue for expatriates from overseas. In the city of Utrecht, according to an estimation from Numbeo, for a family of four, estimated monthly costs are €3,316.52 without rent, and a single person's estimated monthly costs are €938.14 without rent. Utrecht is 28.35% more expensive than Barcelona, for example, without rent. Rent in Utrecht is, on average, 25.23% higher than in Barcelona.
Natalia Ramos comments on how expensive it is to live in the country. "It is very expensive, and all kinds of costs are (rent, utilities, groceries, any leisure activities, etc.) high. Public transport, for instance, is the most expensive in Europe. There are also costs that often are not paid by the person that rents an apartment. Here the renter pays the water and garbage tax (garbage tax alone is over 600 euros a year)".
Labor shortage
The Netherlands continues to face a growing shortage of workers, with recent figures published by Statistics Netherlands (CBS) revealing the extent of the national labor crisis. In the first quarter of this year, the Dutch unemployment rate reached its lowest level in almost 20 years, while the number of job vacancies continued to rise, opening several opportunities for expats.
The industries facing the most significant shortages are trade, business services and healthcare, with CBS recording over 224,000 job vacancies in these industries alone at the end of the first quarter. Meanwhile, vacancies in the hospitality industry saw the most significant increase, with the number of jobs available rising from 30,000 in December to 44,000 in March.
