The cabinet has dropped its controversial plan to scrap the tax on dividends which would mostly benefit foreign multinationals, prime minister Mark Rutte told reporters on Monday afternoon.

Speaking after a meeting between the four coalition parties, Rutte said the €1.9bn which would be ‘saved’ due to the decision would go to companies. More will become public later on Monday when tax minister Menno Snel briefs MPs, he said.

‘The new package will score better in terms of support,’ Rutte said.

The prime minister did not mention the 30% ruling tax break for certain categories of international workers which is also being looked at again. Campaigners are hoping that ministers will agree to a transition period for current claimants.

However, sources in The Hague told RTL that three proposals are on the table where the money could be spent. These include a further cut in corporation taxes and maintenance of the 30% ruling.

Calls by opposition parties to spend the money on healthcare and education were not possible, Rutte said. All companies, including small firms, will benefit from the change of heart, the prime minister said.