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Guest contributor: ‘Will the Dutch government break its trust with expats and cut the 30-Percent Ruling?’

(Editor’s note: On April 20, Prime Minister Mark Rutte’s coalition proposed cutting retroactively the length of time expats in the Netherlands can claim the 30-Percent Ruling to five years from eight as part of a larger budget-cutting plan. Dutch lawmakers are scheduled to vote on the final version of the plan at the end of 2018. Expat groups and Dutch multinationals that depend on highly skilled internationals oppose the changes. A new non-profit expat group, United Expats of the Netherlands, has created a campaign to remind Dutch officials “a deal is a deal” and rally those 60,000 expats affected.)

By OMAR CAMPOS

In April 2018, Dutch parliament proposed to reduce the duration of the 30-Percent Ruling (a tax policy for highly skilled expats) from eight to five years for both current and future recipients of the policy. Such a change will have significant and severe consequences for expats who have decided to move to the Netherlands based on what they believed was a foreseeable financial horizon.

Personally, my family and I decided to make some compromises when we made the decision to move from California to this beautiful country. Looking back, the move has provided abundant benefits and we now consider the Netherlands our home. Moving from California was not an easy decision. I was working in Silicon Valley where large high-tech fortunes were being made and I was witnessing, first hand, history being made.

When I received an invitation from my current Dutch employer, Philips, to come to the Netherlands, many thoughts came to my mind. It was very appealing for my family and me to experiment with life in Europe, and I immediately understood the value this position could add to my career trajectory.

But I was also concerned about the challenges of the transition – both personally and financially. While the specific details regarding an economic agreement now escape me, it was clear that salary would need to be compromised – particularly in light of the differences in cost of living between California and the Netherlands – and that my family and I would need to trust that the quality of life in the Netherlands would compensate in the long run.

The expectation of a better life

That said, at the outset, I remained apprehensive that we would be able to meet our financial obligations – particularly the new financial costs we would experience as part of the transition. However, during my thorough and relatively uneventful compensation negotiations, I learned that the government had a mechanism to help offset these additional costs for highly skilled expats known as the 30-Percent Tax Rule – a policy whereby 30 percent of my salary would not be subjected to taxes for eight years. With this policy in mind, in a matter of only four short months, we moved our family to the Netherlands and began this new adventure.

We moved to our new location with the hope that we were going to improve our lives significantly. And we did. Every single day in this country has been rewarding. We are so thankful that we made this move.

But it’s not just personal happiness. Professionally, the benefits have also been numerous. The opportunity to work with Philips, a large Dutch multinational chartered with improving the lives of millions of people with Health Care solutions, has been inspirational.

The European perspective on how to approach multinational projects has opened my horizons, and my US experience has complemented and extended this perspective in important and unique ways. Prior to joining Philips, I worked with US high tech companies with developing economies around “one laptop per child” type of projects and, in fact, it was my expertise in blended financing for highly impactful projects that led to my recruitment here.

Blended Financing is defined as the “strategic use of development finance and philanthropic funds to mobilize private capital flows to emerging and frontier markets, resulting in positive results for both investors and communities.” In other words, private, public, and multilateral agencies work together to fund and finance socially impactful projects.

Advancing humanitarian efforts in emerging markets

Using this skill set, I am now working in support of the UN’s 2030 Agenda to eradicate poverty worldwide. And, as it turns out, my skill set has been the missing link. Since arriving, together with my colleagues, we have been able to quickly engage the Dutch Developmental Bank, FMO, the Ministry of Foreign Affairs (Minbuza) and other relevant Dutch institutions such as Atradius and RVO that are (coincidentally) aligning their efforts towards the same Sustainable Developmental Goals (SDGs).

Importantly, we have been able to advance the SGDs agenda in key and unserved markets and lead the discussion around the private and public working together. We are still at the tipping point of this new developmental initiative, in which only a few institutions (public and multilateral) and a few private companies have a clear strategy and are executing on it. I am proud to say that my employer and those few leaders involved in this activity will soon be considered subject matter experts and will help shape the way of working for the years to come. Truly, it continues to be a privilege to use my skill set to help efforts to eradicate poverty worldwide.

And yet, with all of this optimism and happiness, I am suddenly faced with potentially severe consequences on the financial livelihood of myself and my family. Why? Because in April 2018 I learned that the agreement that I had made with the Dutch government as it relates to the 30-Percent Tax Rule would be dissolved.

No longer would the term limit be eight years, as agreed upon when I moved to this country, but instead it will be reduced to five years effective 1 January 2019.

Reducing the duration of the 30-Percent Ruling will have a significant impact on my family’s life plan. We made several decisive moves when we arrived here including signing a back-ended mortgage (our monthly payments are higher during the early years) as well as decisions regarding savings and retirement plans. All of these decisions were part of our long-term life plan. And now we are left to wonder what will happen next.

My family and I placed our trust in the government. Like so many other expats facing the same situation, we expected a deal to be honoured. Of course, laws may change over time – but the honourable and fair way to pass such changes is to build in transitional regulation so that the promises made with current recipients are respected. That is how you maintain trust in government.

Will the Dutch government honor its commitment?

As the website of the United Expats of the Netherlands states, “it is grossly unfair to change the rules of the game while it is still being played.”

My employer insists that the government will act accordingly and will protect us. My family and I are trusting that this is the case and the financial decisions we have made will remain sound and that we will not be forced to suddenly leave a place we now call home.

Personally, we are very happy here. And professionally, my employer and I have made significant advances together and we are not finished yet. There is much that remains to be done, and I look forward to the challenges ahead.

I truly hope that the government reconsiders its position and opts to honour the commitment it has made to so many of us. Otherwise, not only will the lives of many expats – myself included, be dramatically affected, but the trickle-down effects will be equally significant. Indeed, setting such an undesirable precedent will leave many questioning whether the Netherlands is a trustworthy and reputable place for business.

About the author:

Omar Campos is senior director, Global Funding Solutions at Royal Philips.

He lives with his family in Amsterdam. Before coming to the Netherlands, he worked in Sunnyvale, Calif. at one of The Valley’s oldest and largest tech companies.

Omar has an MBA from the University of Miami School of Business.

 

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