donderdag 10 november 2011

Should the 30% ruling only remain for foreign CEO's?

@FransWeekers: "I do not want a salary ceiling for the #30% ruling because that would drive the head offices of multinationals out of the Netherlands".

Now I have lost it...

Let's go back to what he previously said.

"I do not want that a person who is living within 150 km's of the Dutch border will get the 30% ruling because this person will not have extra territorial expenses. The reimbursement of extra territorial expenses is the reason why the 30% ruling was created".

Well, he has a point there. No extra territorial expenses, means no reimbursement, fair enough. The changes he proposed are not the right changes though in my opinion but I have already made my point about this in earlier blogs.

So he said, the 30% ruling is granted so that the extra territorial expenses can be reimbursed. We do require a minimum salary, but not a maximum salary. But if the reason behind the 30% ruling is to cover the extra territorial expenses, why would that reason not be applicable in the case of a CEO? Of course a CEO has extra territorial expenses too. But let's say that the CEO receives a salary of
€ 2.000.000. He would then receive a tax free allowance of € 600.000. As if a CEO would have twenty times higher extra territorial costs than an expat with a salary of € 100.000. Will a CEO visit his family more often than a manager? Will this CEO need to live in a property with a monthly rent of
€ 40.000? I doubt it.

With the 150 km requirement the State Secretary said that it has a certain roughness in it, which means that it can exclude people from the 30% ruling which would otherwise have gotten it. What is the difference between 150 and 148 km, especially if the person living 148 km from the border is working 350 km away from home? Why not look at the distance between home and work instead of the distance from the Dutch border? Too bad, that is just the roughness in the figure of 150. The same roughness sees on the percentage of the ruling. It used to be 35% but in 2001 it was reduced to 30% due to the reduction of the tax rates in 2001. 30% is also a rough figure. If it is not enough the employer is allowed to reimburse the real expenses instead. But if it is too high nothing is done. That is the roughness, which must be there to prevent that everybody still has to proof their real expenses. But that doesn't mean it will always be fair. Reasonable costs do not increase with salary.

Money needs to be saved now due to the economic crisis. That is fair enough. Everybody has to help fighting the crisis. But it looks now as if the knowledge migrant with a salary of € 60,000 per year has too pay because he will lose the 30% ruling, but the CEO with a salary of € 2.000.0000 won't notice anything.

The State Secretary uses the same argument which was used to defend the bonus culture within multinationals. In the mean time measurements have been taken to prevent high bonuses. By using the same argument again with respect to the 30% ruling the idea is given that nothing has been learnt.

One other comment. One of the reasons the discussion started was due to the fact that two board members of Philips with the Dutch nationality have the 30% ruling. The previous CEO of Philips had the Dutch nationality. Weekers does not want to create problems for a multinational when they want to hire a CEO from abroad. Unless of course the CEO is Dutch and has been living outside the Netherlands only for 17 years. So he makes it more difficult for Philips to attract a Dutch CEO from abroad than a foreign CEO. Makes no sense to me.

The salary requirement should be lowered, it will now affect too many knowledge migrants in the Netherlands, while on the other hand a group is not affected at all.

Expatax is fighting against this salary requirement and wants it reduced and has combined forces with the municipalities of Amsterdam, Rotterdam, The Hague, Brainport Eindhoven, Expatcenters and international companies.

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