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30% ruling and your mortgage

by Henk Jansen

Many expats make use of the 30% ruling, a special financial arrangement which allows them, in effect, to receive 30% of their salary tax free. Expats with the 30% ruling have a higher net income – so what impact does this have on their ability to get a mortgage?
Mortgage providers in the Netherlands look at gross rather than net income when deciding how much potential home-owners are able to borrow. This means expats with the 30% ruling don’t have any advantage over other people when it comes to requesting a mortgage.

There are, however, three banks that are prepared to give expats a higher mortgage than the mortgage sector code of conduct technically allows. This extra amount is supposed to be paid off during the period that the 30% ruling applies to the home-owner.
Let me be quite clear. Expat Mortgages, as the biggest Dutch independent mortgage advisor for expats, does not support this method of boosting the size of a loan in any way.

Mortgage providers in the Netherlands look at gross rather than net income when deciding how much potential home-owners are able to borrow. This means expats with the 30% ruling don’t have any advantage over other people when it comes to requesting a mortgage.

The Dutch government has decided to reduce the length of time people can claim the 30% ruling from eight to five years from the beginning of 2019. Incidentally, the ruling used to apply for 10 years but this was cut to eight in 2012.
The four parties that make up the current government said in their coalition agreement that they would cut the 30% ruling back to five years. One reason was the suggestion that expats use the benefit for an average of just five years, so few people would be affected.
But multinationals need highly skilled staff from abroad, and if the short-stayers are excluded from the calculations, the average claim is far longer than the government assumes.

The cabinet’s decision to scrap the tax on dividends is another reason for the cut – the money to pay that bill needs to be found somewhere. And, for the first time, the government has decided not to have a transition period. This means that everyone who has been claiming the tax break for five years, whether originally told they would benefit for 10 or eight years, will lose it on January 1.
Expats, multinationals, universities and schools have been campaigning hard against this. The last word has not yet been said, and there is a good chance that the blow for current beneficiaries may be softened. All may be revealed when the government presents its budget in September.

In the meantime, the reduction in the 30% ruling, for both new and current claimants, will not have an impact on the provision of mortgages to expats – unless a mortgage advisor has used the tax break to increase the total loan. This, as I have already said, is not something that Expat Mortgages approves of, not in the past and not in the present.