Dutch Government Reverses 30% Tax Ruling Cuts, to Be Confirmed on Prince’s Day
Dutch Government Reverses 30% Tax Ruling Cuts, to Be Confirmed on Prince’s Day
Expats to retain a 27% tax break under new budget plans, while higher VAT rates on cultural and recreational services spark concerns across industries.
The Dutch government has made important changes regarding the 30% tax ruling for expats. This tax break allows highly skilled migrants working in the Netherlands to receive 30% of their salary tax-free for up to five years. Earlier this year, the government planned to reduce this benefit in stages starting January 2024. The proposal was to cut the tax-free portion to 20% after 20 months, then to 10% for the remaining 20 months. Many businesses raised concerns that this could make it harder to attract international talent and hurt the Dutch economy.
However, the government has now decided to reverse these cuts. Instead of gradually reducing the tax break, the ruling will be slightly reduced from 30% to 27% for the full five years. This means that expats will still benefit from a significant tax-free portion of their salary, though at a slightly lower rate than before. This decision is seen as a way to keep the Netherlands competitive in attracting skilled workers from abroad.
In addition to the 30% ruling changes, the government is also planning to increase VAT (value-added tax) on many recreational activities. Starting in 2026, the VAT on things like concerts, museums, theatre performances, and books will rise from 9% to 21%. Some services, like cinema tickets, will remain at the lower 9% rate due to previous agreements. This tax hike is expected to raise around 1.2 billion euros each year, but many people in the cultural and sports sectors are worried that it will make these activities more expensive and less accessible. For example, sports facilities like gyms and swimming pools will also face higher costs, which could discourage people from using them.
On top of these changes, the government’s 2025 budget will also include measures to make the housing market more attractive for investors. The tax on buying second homes will be reduced from 10.4% to around 8%. This is meant to encourage more rental properties to be available, as the higher tax rate has contributed to a shortage in rental housing.
Finally, the budget includes plans to provide more money for free school meals for children in low-income families. The current program already helps many schools provide free breakfasts, lunches, and snacks, but the new funds will aim to support even more children. The government will announce all these plans officially on Budget Day or Prince’s Day in mid-September, and they will be discussed in Parliament soon after.