Digital nomads and foreign professionals in the Netherlands will lose tax privileges, as is happening elsewhere

There are more and more digital nomads. People who can telework and who decide to move countries with their PC in hand to be able to carry out their tasks from wherever they want. This means that many countries have already decided to regularize their situation, especially when it comes to taxes.

In general, many countries want appear attractive for this new professional profile but now regulating the issue of their income to make them also pay taxes like any resident of these countries. In Spain, this has already begun to be defined since the summer.

On the other hand, a few months ago Portugal repealed certain tax privileges for digital nomads and other foreign residents, who paid less taxes on their assets than a Portuguese person. It must be said that there are many people from northern Europe living in that country and that has made life very expensive and even in Lisbon there are many protests against digital nomads.

Now it is the government of the Netherlands who has announced that eliminates certain tax advantages they enjoyed foreign workers in its territory.

How Holland has limited foreign taxation

Now the Netherlands has announced that it is limiting foreign taxation. Until now, foreign workers enjoyed a 30% tax exemption as compensation for traveling to work in their territory.

Specifically, the worker who could benefit from that 30% of their tax-free compensation had to be someone who resided in their country of origin and who moved, if a Dutch company needed them. That is not the case of digital nomads who work on their own and often in companies that are not local.

In general, the normal 30%, as defined by the Dutch authorities, explains that if you go to work in the Netherlands from another country, you may end up having so-called extraterritorial costs. “This is due, for example, because living here is more expensive than in your country. You can receive a tax-free refund from your employer for these additional costs” or the employer can also choose to pay you 30% of your salary, including compensation, tax-free. This is the 30% rule.”

As Xataka remembers, privileges are cut, but they are not eliminated. The Netherlands, like other countries in the world (Canada has also recently announced its plans) wants to attract the attention of highly qualified foreign talent and thus make the country gain competitiveness.

The politician Pieter Omtzigt, candidate for president of the government, affirms that the fact that Foreign expatriates receive 30% of their income tax-free“it means that they earn considerably more than the Dutch who do exactly the same job. This is unfair and that is why the rule around my proposal has been relaxed”, just as he has shared on his X profile.

This is, clearly, for hired people. In the case of digital nomads, who work on their own, as of January 1, the 30% tax regulation establishes a maximum reduction limit, but limiting it to the “Balkenende rule” that establishes a maximum tax-free allowance of 223,000 euros, the latter according to the information shared by Xataka. It is difficult to know exactly how many digital nomads this new measure may affect. since this concept is very broad. It will depend on the residence permit that a person has within the country, while teleworking for a foreign company.

It must be taken into account that in practice, although the political discourse wants to show protection to the local worker against foreign workers, in practice we have, as we will see later, that the Netherlands needs labor and that the country is not among the most attractive to move to when a digital nomad has to choose a new destination in the world. It must be taken into account that the country has presidential elections in a few days and that may be one of the origins of this protectionist discourse of Dutch professionals towards foreigners.

Lack of local labor

With the reform that will come into force in 2024, there are new requirements for foreign professionals, when their positions can be filled by locals. All this, based on a problem that the Netherlands has, despite the words of some politicians: There is a shortage of talent and it is not the most attractive country in the world for digital nomads either. as the surveys clearly show.

For very protectionists that the Dutch want to be with their exclusionary speech, Reality shows that foreign labor is needed. The technology entrepreneur René Janssen declared in the Dutch television program that “for every IT vacancy we open, we don’t find a single Dutchman.”

Via | Xataka

Image | Photo by Callum Parker on Unsplash

In Genbeta | Malaga is the second favorite city in the world for executives to telework: the climate and quality of life is differentiating