From Taxing to Attracting
The inversion of the Dutch fiscal policy framework — why the right question is not how to tax the wealthy more heavily, but how to attract high-net-worth individuals to the Netherlands to generate economic activity.
By Jacobus van Merksteijn · 16 min read · 28 May 2026 · Edition 2
The Wrong Question — and the Right One
The current debate runs: how do we tax the wealthy more? This advice proposes that the right debate runs: how do we make the Netherlands so attractive that high-net-worth individuals choose to live, do business, and invest here?
Italy, Portugal, Switzerland, Greece, and the UAE have already made this inversion and are reaping measurable results in the form of wealth inflows, talent, and economic activity. The Netherlands is moving — paradoxically — in the opposite direction: scaling back the 30% ruling, abolishing partial non-residence status, and introducing an accrual tax on unrealised gains in Box 3.
"The narrative problem runs deeper than the economic one. The Netherlands needs a framing in which attracting the wealthy is presented as a prosperity strategy for all — not as a gift to the privileged few."
The Inversion of the Policy Framework
The Dutch fiscal debate is framed in distributive terms: how is the existing pie divided more fairly? The implicit assumption is that the pie is constant — a static end-game. This framing is empirically wrong: the pie grows or shrinks as a function of the policy surrounding it.
A country can stand in two fundamentally different modes with respect to capital:
| Aspect | REPULSION MODE (current NL) | ATTRACTION MODE (IT, PT, CH, AE) |
|---|---|---|
| Question posed to the wealthy | How do we tax them more? | How do we make them welcome? |
| Type of policy | Defensive, controlling, punitive | Offensive, enabling, entrepreneur-oriented |
| Result after 10 years | Capital flight, shrinking tax base | Inflow of the wealthy, growing economic activity |
| Political narrative | Fight against inequality | Fight for prosperity growth |
| Model country | Norway, France (1989–2017), UK (2024+) | Italy, Portugal, Switzerland, UAE, Singapore |
| Risk of strategy | Loss of productive core over 1–2 generations | Short-term increase in inequality |
The Netherlands is currently in full repulsion mode. This does not create a 'race to the bottom' as is often feared, but a gradient of fiscal climate. Capital flows along this gradient — predictably and empirically measurably.
Deeper Than Economic
Dutch political culture has a deep-rooted aversion to visibly rewarding the wealthy — rooted in a Calvinist ideal of equality, fed by narratives about 'greed culture', and reinforced by rhetoric that presents wealth as morally suspect.
This framework makes it politically almost impossible to openly advocate what is economically necessary: a fiscal environment in which high-net-worth individuals choose the Netherlands over Italy, Portugal, or Switzerland.
"A politician who proposes this is immediately branded a 'lobbyist for the rich'."
— J. van Merksteijn, Policy Advice II (May 2026)
The diagnosis is not primarily economic — the economics are clear. The diagnosis is narrative and political: the Netherlands needs a framing in which attracting the wealthy is presented as a prosperity strategy for all — not as a gift to the privileged few. Italy has successfully achieved this framing — Milan is now one of the fastest-growing luxury and business hubs in Europe.
Italy — Flat Tax €200,000 on Foreign Income
Italy — Regime forfettario per neo-residenti
Introduced 2017 · doubled to €200,000 in Aug. 2024
A flat annual levy on all foreign income and assets, regardless of the actual amount. Family members at €25,000/person. Valid for 15 years. No disclosure obligation for foreign assets.
Example — British Family
savings over 15 years by relocating to Italy
A family with €1m/yr in foreign investment income: Italian levy €275,000 (€200K + 3×€25K) versus approximately €600,000 in the UK. Saving: €325,000 per year. Additionally, exemption from Italian wealth tax and IVAFE disclosure requirements for foreign assets.
Result 2025: Henley & Partners estimates the inflow of HNWIs to Italy at approximately 3,600 individuals. Milan is experiencing turbulent growth in luxury real estate, financial services, and the start-up ecosystem. The attracted wealthy generate indirect corporate tax, VAT, payroll tax, and spending that comfortably exceed the direct flat-tax revenue.
Portugal — IFICI (NHR 2.0)
Portugal — Incentivized Fiscal Regime for Scientific Research and Innovation
Introduced 2024 · successor to the NHR regime
Valid for 10 years. Strategy: attracting talent in export-oriented or innovative sectors.
- 20% flat rate on Portuguese employment income in 'highly qualified' roles (engineering, research, board membership) — versus progressive rates up to 53% under the standard system.
- Full exemption from Portuguese tax on all foreign passive income (dividends, interest, royalties, rent, capital gains), provided not from blacklisted jurisdictions.
- Exemption of foreign capital gains — particularly attractive for investors and founders anticipating a liquidity event abroad.
Portugal achieves only 40% export value creation as a % of GDP, but retains 73% domestic ownership (φ). Result: NEPK 9.8% — more than double the Dutch level. High exports without ownership policy is transit trade, not prosperity.
Switzerland — Lump-sum Taxation
Switzerland — Lump-sum taxation (forfait fiscal)
More than a century old · federal minimum CHF 434,700
For non-Swiss nationals who do not pursue any gainful employment in Switzerland. Levy based on annual worldwide living expenses. No disclosure obligation for foreign income or foreign assets — except where treaty protection is invoked.
Inheritance tax
- No inheritance tax for direct descendants in most Swiss cantons
- Particularly attractive for family businesses and wealthy dynasties
- Switzerland protects domestic ownership through fiscal support for succession
Netherlands — Contrast
- Business Succession Scheme (BOR) is being scaled back
- Inheritance levy forces family businesses to sell to foreign private equity
- Structural weakening of φ (domestic ownership) as a policy consequence
Estonia & UAE — Two Extremes
Estonia
0% corporate tax on reinvested profits
Tax levied only upon distribution to shareholders. Companies that reinvest profits pay no corporate income tax. Estonia grew from a poor Soviet republic (1991) to a top-ten EU economy by GDP per capita. The tax system bears substantial responsibility for this.
United Arab Emirates
Zero rate on personal income · 9% CIT (largely neutralised)
Zero rate on personal income, dividends, and capital gains. The 9% corporate tax (since 2023) is neutralised in many cases by free-zone arrangements. Dubai grew within 5 years into one of the three largest hubs for relocating UHNWIs worldwide. The UK lost 10,800 millionaires to this regime in 2025 alone, following the abolition of the non-dom system.
Core lesson: Estonia proves that 0% corporate tax on reinvested profits creates a systemic incentive for capital formation — exactly what a NEPK-oriented economy needs. The UAE proves that the zero rate on personal income exerts a direct draw on the most mobile wealthy individuals in the world.
What the Netherlands Is Getting Wrong Simultaneously
While competitors activate attraction mode, every recent Dutch policy change moves in the opposite direction. The pattern is consistent — a fundamental policy divergence:
| Year | Measure | Effect |
|---|---|---|
| 2012–2024 | 30% ruling: maximum duration shortened from 10 to 5 years; cap at €246K (Balkenende norm); phasing 30/20/10 (later reversed) | Less attractive for expats; cap is a hard ceiling |
| 2025 | Partial non-residence status for expats abolished. Full worldwide income now taxed in the Netherlands | Box 2 and Box 3 henceforth applied to foreign income for expats |
| 2027 | 30% ruling reduced to 27%. Salary thresholds raised by >9% | Further erosion of expat attractiveness |
| 2027 | Box 3: accrual tax on unrealised gains, 36% rate; realisation tax on real estate/family businesses | Compounding destruction; lock-in on real estate |
| 2026 | Cash ban above €3,000; joint transaction monitoring by banks; expansion of the AMLD framework | €1.6bn cost; reputational damage as open economy |
The 30% ruling is being scaled back at exactly the moment Italy is extending its flat tax and Portugal is introducing IFICI. This is no coincidence — it is a fundamental policy divergence.
The Selection Effect: Who Leaves and Who Stays
An under-examined dimension: high wealth taxation produces qualitative selection. It is not the case that 'the rich' depart as a homogeneous group; a specific profile leaves first.
| Characteristic | Leaves first (high mobility) | Stays (low mobility) |
|---|---|---|
| Profession | International entrepreneur, exporter, founder, investor | Local entrepreneur, service provider, civil servant, professional |
| Income source | Capital income, dividends, capital gains | Employment income, pension, benefits |
| Age | 35–65 (productive phase) | <35 (still tied) or >65 (socially rooted) |
| Int. experience | High — already has foreign ties, languages, networks | Low — exclusively Dutch orientation |
| NEPK contribution | Disproportionately high — exporting and investing | Lower — domestically circular |
Policy filters out exactly the people the Netherlands needs most: exporting entrepreneurs, internationally operating investors, founders with a global perspective. What remains is the group with the lowest NEPK contribution.
"The Tax Authority and the elite of wealth planners play an endless cat-and-mouse game in which the mice consistently win. Every new Tax Authority measure is circumvented within months by clever structures. The middle class, which cannot afford advisers, meanwhile pays in full."
— Observation from practice
A rational policy strategy recognises this: set the rate such that clever optimisation no longer pays. A broad rate of 20–25% is paid willingly — a rate of 36% is avoided or fled by every well-advised wealthy individual. The net yield is often higher at the lower rate.
Eight Concrete Proposals — From Repulsion to Attraction
Dutch Flat Tax for New Residents
€150,000/yr (below Italy's €200K to gain a competitive edge) on all foreign income, valid for 15 years, extendable by €20,000/family member. Estimated impact: 2,000–4,000 HNWIs in the first five years.
Estonian-style Corporate Tax on Reinvested Profits
Zero rate on reinvested business profits, levy only upon distribution. Phased in for companies under €50m turnover to avoid benefiting large multinationals.
Preserve & Strengthen the 30% Ruling
Stop the reduction to 27%. Extend duration to 8–10 years for scarce skills (STEM, medicine, engineering). Reintroduce partial non-residence status for foreign investment income.
Capital Gains Tax Instead of Accrual Tax
Capital gains tax only on realisation, no tax on unrealised appreciation. Preserves the compounding effect, prevents liquidity problems, aligns the Netherlands with virtually all developed countries.
Box 3 Rate Maximum 25%
Lower the 36% rate to 25% — within the optimum indicated by Laffer curve research (22–49%). A lower rate on a broader base most likely yields more revenue.
Family-Business-Friendly Succession Arrangement
Strengthen the Business Succession Scheme (BOR) rather than scaling it back. Consider an arrangement comparable to Switzerland: no inheritance tax for direct descendants of family businesses above a threshold value.
Reduction of Enforcement Burden: Coase Test
Enforcement costs must be demonstrably lower than the externality. Stop AMLD expansion (€1.6bn, yield unknown). A 'surveillance state' is avoided by internationally mobile talent.
Cultural-Political Reframing
Launch an active public narrative: attracting the wealthy = a prosperity strategy for all. Annual CPB/Finance reports quantifying positive effects. Speak of 'attracting talent', not 'cutting taxes for the rich'.
The NEPK Case: Asymmetric Loss
An attracted high-net-worth individual contributes to the NEPK through a chain of effects; a departing wealthy individual does the reverse — often in amplified form.
| Scenario | Assumption | NEPK effect |
|---|---|---|
| Departure of entrepreneur (€20m) | Business sold/relocated; 50 local jobs lost; €5m/yr corporate tax base lost | −€15–25m NEPK/yr |
| Arrival of HNWI under flat tax | €150K flat tax + €2m local spending + €5–10m NL investments | +€7–12m NEPK/yr |
| Net position per exchange | One departing entrepreneur costs approximately 2–3 newcomers to compensate | Asymmetric loss |
| With 1,000 annual departures | Requires 2,000–3,000 newcomers per year for NEPK neutrality | Not achievable in current mode |
The British Cautionary Tale
The United Kingdom abolished its non-dom regime in 2024. Result within one year: 10,800 millionaires departed — the largest net loss worldwide in 2025. London fell in the rankings of global wealth hubs. The British Treasury now expects that the abolition will yield less than the old regime, because the departing wealthy took their British spending, corporate tax contributions, and investments with them.
The Netherlands now risks a comparable trajectory — in amplified form, because Dutch fiscal infrastructure was already stricter than Britain's before the non-dom abolition.
Recalibrating the Dutch Fiscal Position
The Dutch fiscal discussion is trapped in a wrongly framed question. The question 'how do we tax the wealthy more?' is simultaneously economically wrong (negative Laffer effects above the 25–30% threshold), technically unstable in regulatory terms (positive-feedback capital flight), and culturally destructive (selectively filtering out the most productive segment of the population).
A rational parliamentary debate should focus on:
- Not how to tax Box 3 more heavily, but how to design Box 3 so that compounding is preserved and lock-in is prevented
- Not how to scale back the 30% ruling, but how to strengthen it for scarce skills
- Not how to increase the enforcement burden, but how to introduce a Coase test for all enforcement measures
- Not how to penalise departure with exit taxes, but how to make the Netherlands more attractive than the destinations
- Not how to maximise GDP through government spending, but how to strengthen NEPK through productive economic activity
"The narrative problem runs deeper than the economic one. The Netherlands needs a framing in which attracting the wealthy is presented as a prosperity strategy for all — not as a gift to the privileged few."
The current course leads to the British scenario — departing wealthy, a shrinking tax base, higher rates on a hollowed-out foundation. The alternative course — that of Italy, Portugal, Switzerland — leads to growth, inflows, and a stronger NEPK for the coming generations. The Netherlands has a choice here. The facts make the direction clear.
Sources: CNBC — Italy flat tax Milan boom · The Italian Lawyer — flat tax guide · IBA — Portugal IFICI · Ventures.eu — NHR 2.0 · Walder Wyss — Switzerland lump-sum · Enty.io — Estonia tax system · Henley & Partners — Wealth Migration 2025 · Oxford Tax Centre — Tax Competition Europe · Reuters — Norway wealth tax exodus · Business.gov.nl — 30% ruling