As it stands expats do not pay tax on the first 30% of their salary for up to eight years in the country.
This makes it the most generous expat tax break in the EU.
To claim, expats have to earn at least €37,000 (£33,044, $43,517) a year and must have lived at least 150 kilometres away from the Netherlands. Controversially, the more you earn the more you benefit.
Last year a government commissioned review concluded the 30% rule was “too generous”. The report found that the rule cost the Dutch treasury an estimated €755m in 2015 and €902m last year and laid out several alternatives to trim the tax benefit, including a cap and the implementation of a 20% rule.
Rejected reforms
“The Dutch cabinet looks set to reject other reforms to the rule suggested by a report into the scheme,” said Robert Bosma, a tax adviser with Amsterdam based Broadstreet told International Adviser.
“In the new cabinet’s proposals, a shortening of the 30% ruling to five years (from eight years) is planned.
“Not much further detail is available on this yet, but given the fact that this is planned to start in 2019, I expect current rulings to be left unharmed.”
Even if offered for five years instead of eight, it still is a very attractive deal, according to Bosma, at it will lower income tax to a maximum effective rate of 36.4% (in 2018: 34.6%) and leave net assets tax free.
