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Netherlands - Planned tax changes could drive expatriate workers abroad

14 October 2011

Frans Weekers, Junior Tax Minister, intends to change the so-called '30% tax ruling' for expatriates. Under the ruling, expatriates workers do not have to pay tax on the first 30% of their salaries.

The Minister now intends to put an income limit of around 70,000 Euro on the ruling, otherwise expatriates do not qualify. He also wants to exclude expatriates who live within 150 kilometres of the Dutch border, which would rule out all Belgians and many Germans.

Amsterdam City Council has now written to the Minister to re-consider his plans, Het Financieele Dagblad newspaper reports. The Minister's changes would mean that young IT experts, teachers, designers and other less well paid professional would no longer qualify and might therefore move away. The cities of Rotterdam and The Hague are also said to be extremely nervous about the plans.

Hermen Hulst of Amsterdam-based Guerilla Games, told Het Financieele Dagblad newspaper that 75% of his staff currently qualify for the ruling. If the changes go ahead, he expects a 1 million Euro increase in his wage bill to keep workers on board.

Hulst said "compared with the UK or the US, our income tax rates are high. The 30% ruling works in our favour. Otherwise, we will have to seriously consider moving abroad."

The Finance Ministry said it is open to discussions. "The changes are designed to exclude pseudo expats, not to spoil The Netherlands’ reputation as a place to do business."

The Minister is expected to come up with concrete proposals in November 2011.

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