Thread by @GergelyOrosz

The Netherlands is likely to remove the 30% ruling - a massive tax break for 5 years utilised by almost all tech workers.

My take on what this will mean.

In short: less “tech immigration” to NL and an own goal. A major win for the UK, and, possibly, Spain.

My longer thoughts:

1. What is the 30% ruling? For 5 years, immigrants meeting a certain income requirement don't pay tax on 30% of their annual earnings. E.g. someone making €100K/yr makes €76K in net instead of €59K in net.

This is huge, and a major attractor of tech workers moving to NL.

2. I would have never moved and settled permanently in NL without the 30% ruling.

In London, I made £92K/yr. Uber offered €93K/year in salary. Thanks to the ruling, I made ~10% more in take-home after moving, despite getting paid ~15% less!

The ruling made my decision to move.

3. The 30% ruling was important for me b/c I had to start from scratch here. I got the tax break for 5 years, managed to buy a house & settle. I'm now happily paying the "normal" tax rate. The 30% ruling helped me get started and I'm grateful for it.

So what about the impact?

4. Some people assume without the ruling, salaries in the Netherlands would go up.

They will not. They are already high: techpays.com/europe/netherl…

Employers don't care about tax rulings. They care about the cost to hire.

If the cost to hire in NL goes up --> they hire elsewhere.

5. So if companies won't pay more in NL, but people are less likely to move, what does it mean?

a) UK upper hand. They still pay more than NL, and the 30% ruling no longer tips towards NL.
b) Advantage to countries with an expat ruling: Spain! Expats pay ~24% tax for ~5 years.

6. The impact will be clear: fewer highly paid tech workers (making >€100K/yr) will move to NL. Global companies invest in UK, Spain, Ireland offices as well.

Short-term the government gets more tax revenue. Mid-term NL and Amsterdam lose out on being a tech talent magnet hub.

7. Long-term, NL loses future residents like me who never move & settle because there is no compelling financial motivation to do so.

They end up in places like Spain or in the UK.

The Pragmatic Engineer would be generating UK taxes if this rule change happened 6 years ago.

8. One more, unintended effect: the Dutch government will struggle to reintroduce this ruling, even if they wanted to.

Once pulling the rug from under people who assumed they have an agreement with the government: trust is lost.

The NL government, of course, knows all this.

9. Impact on Dutch salaries.

My feeling is the 30% ruling + so many expats moving have pulled up the Dutch compensation market A LOT. Because US companies invested here, as they knew they can hire from across Europe + locally.

NL tech salaries are ~20% above German ones today.

10. So even though there has been a feeling among local residents how the 30% ruling is unfair: removing this will reduce competition (fewer people move!) & will slow down salary increases.

NL tech salaries today: techpays.com/europe/netherl…

And German ones: techpays.com/europe/germany

11. On a positive note: less "tech immigrants" and a slowdown of tech salary increases could well have a positive effect on slowing down the rapid housing increases in places like Amsterdam, Rotterdam etc.

Perhaps this is also the intention of the gov?

https://twitter.com/franksnijders/status/1518590904336007170?s=20&t=_yVIp3PRI0WANqRuPuPTKg

12. Another country in the EU that might be a winner is Portugal. As NL is planning to not want to attract tech workers from abroad, they are doubling down in doing so. Companies like Mollie opened offices in Lisbon.

They might also be winners here:

https://twitter.com/brunojdo/status/1518592361026277378?s=20&t=_yVIp3PRI0WANqRuPuPTKg

13. Summing up. If this initiative passes, the biggest winners in EU for "tech attractiveness" will be:

UK, Switzerland: paying the most + lower employer-only costs.

Spain, Portugal: "tech expat"-friendly taxes to attract them.

Ireland: good € + English as a main language