As expected, a majority of MPs have voted in favour of a measure to reduce the 30% ruling granted to some international residents and to use the extra money raised to cut the interest rate payable on student grants.

The amendment, proposed by Pieter Omtzigt and backed by ChristenUnie, GroenLinks/PvdA and Volt, was voted through in a late night vote on the last day of parliament before the general election. As an amendment, it is binding on the government.

The tax break is widely used by Dutch companies and universities to bring in foreign staff for positions that they have been unable to fill locally. Both tax minister Marnix van Rij and the VNO NCW employers organisation had warned against the move.

Five years

People who meet stiff qualifications and are posted to the Netherlands from abroad can currently benefit from the tax break for up to five years. Omzigt’s amendment calls for take break to be reduced from January to 30% of salary  for 20 months, cut to 20% for 20 months and then to 10% for a further 20 months. 

There will be a transition period for people who were already claiming the tax break in the fourth quarter of the year.

Omzigt, currently ahead in the polls, had included phasing out the benefit in the manifesto for Nieuw Sociaal Contract, the party he has recently formed to fight the November general election. 

In particular, Omzigt blames the 30% ruling for the current problems on the Amsterdam housing market, saying it enables foreign workers to inflate house prices in the rental and owner-occupier market. 

Last year the government decided to cap the maximum benefit next year after earlier reducing the time the 30% ruling can be claimed from eight to five years.

Reducing the scope of the ruling still further will save €3 million in 2025, rising to €194 million a year by 2029.

“The government is requested to use this budget to reduce the interest rates on student loans paid by the “unlucky generation”, who studied without a grant,” the amendment said.

The interest rate on loans to students who graduated five years ago is about to go up from 0.46% to 2.46%, and that has led to demonstrations and calls for action from students and politicians. 

As yet it is unclear what impact the measure will have on the interest rate which students will have to pay. MPs also voted in favour of a motion to freeze interest rates at their current level, but the government does not have to carry out a motion.