Lack of Full Transition Period For 30% Tax Rule Violates Dutch Law

15 October 2018

UENL Stichting hired the law firm Stibbe (Tom Barkhuysen) to investigate whether the Government can legally implement the proposed changes to the 30% rule without transitional measures. The resulting Legal Document, which was submitted to the Finance Committee, concludes that the proposal is contrary to the principles of legal certainty, predictability, and proportionality. Even more, the lack of transition measures is in direct conflict with the Staatssecretaris’s own published policy on transitional law in tax legislation and with the principles of due diligence and justification. As such, the proposal is unlikely to meet judicial scrutiny should it go into law and, therefore, the 2019 Tax Plan should be amended accordingly. The document was produced in Dutch, with an English translation also available.

The #30Rule and Dividend Tax Proposals

Questions about the #30Rule and Dividend Tax? This is what we know, and don’t know.

UENL has confirmed that the dividend tax was submitted as a separate law proposal on Prinsjedag, September 18th, 2018. The dividend tax is part of the “Wet Bronbelasting 2020” proposal while the #30Rule is part of the “Belastingplan 2019” proposal.

Last week, we were informed that Parliament will vote upon these proposals separately on November 15th, 2018. We also heard the news of the reconsideration of all proposals by the government in regards to creating a better business climate – which includes the dividend tax and possibly the #30Rule.

What are the consequences for us? To be honest, we don’t know. We are not political analysts, however, we have been told that there are both positive and negative effects to this reconsideration – and as such, our optimism should remain tempered.

In the weeks ahead, we will continue our efforts to encourage Parliament to include an amendment to the #30Rule so that a transition period is included. We hope that the legal opinion assists in these efforts.

As we know more, you’ll know more. #aDEALisaDEAL

International Press Coverage of #30Rule

Interest from members of the international community has grown with respect to the #30Rule. A new article in Bloomberg Tax discusses the situation, particularly the potential consequences for start-ups and tech companies. As the article points out, the current proposal has:

"...triggered outrage from universities, companies, and industry associations.They say the lack of a grandfather clause for workers with existing agreements makes the government look untrustworthy, damaging the country’s reputation as a hub for startups and multinational investment."

We agree.

A complete copy of the article can be found here.

"Dutch tax break change cheeses off expats"

International attention for the #30Rule continues to climb. Read this story in France24 about the severe consequences of the current proposal, and why a transition period should be included.

As Monique Mols, ASML spokeswoman notes:

“The ruling violates an agreement … This is a problem. Internationals did their financial planning based on a government they thought was reliable. Now they find it's not the case.”

#aDEALisaDEAL

MessageBird Shares UENL Perspective

Communication provider MessageBird published an op-ed in Het Parool in which they share UENL’s perspective that, at minimum, transitional regulation should be included in the 30Rule legislation. As Mayke Nagtegaal and Robert Vis, respectively coo and founder / CEO of MessageBird, write:

“Voor ons staat voorop dat de 30 procentregeling niet op de schop hoeft. Deze regeling maakt ons land interessant als vestigingsplaats voor talent dat hard nodig is om onze economie duurzaam te laten groeien. Maar mocht een Kamermeerderheid een aanpassing goedkeuren, dan is een uitzonderingspositie voor bestaande gevallen vanuit het oogpunt van rechtszekerheid het minste wat de Tweede Kamer kan doen.”

Similarly, in an open letter published on 17 September, Nagtegaal and Vis wrote:

The time is now for the Netherlands to double down on policy to reinforce our reputation as a magnet for tech talent and innovation. Instead, we’re about to take a step backward — by changing the 30% tax incentive for expats from eight to five years. Even worse, the change wouldn’t just be applied to new workers, but those who have already been living, working and contributing to our local economy here for years — risking our international business reputation as a place that promises one thing to workers, but does another.

Thank you, MessageBird, for sharing your voice. #aDEALisaDEAL