Dutch Budget Deal for 2027: Social Security Cuts Reversed, But Workers Foot 97% of Tax Bill – What Expats Need to Know

The Dutch minority cabinet led by Prime Minister Rob Jetten (D66) has reached a budget deal for 2027, reversing most planned social security cuts and allocating €1.5 billion to protect purchasing power. The deal is funded partly by €750 million in tax increases on higher incomes, but the planned reform of the asset tax (box 3) is likely delayed again to 2029. The budget includes €6 billion in total tax increases, with analysts estimating nearly 97% will be paid by workers, drawing sharp criticism from the Council of State.

What’s in the deal?

The cabinet — a coalition of D66, VVD, and CDA — agreed to scrap the planned €2.8 billion cut to the state pension (AOW) and largely reverse cuts to unemployment (WW) and disability (WIA) benefits. The maximum duration for WW benefits will remain 24 months, and the proposed 20% reduction in the daily wage cap for benefits was scaled back to 7.5% Source: NOS.

To shore up purchasing power, the government is injecting €1.5 billion, partly funded by a €750 million tax hike on higher incomes. The increase in the healthcare deductible (eigen risico) will be postponed by one year Source: NL Times.

Who pays?

The Council of State (Raad van State), the government’s top advisory body, issued a stinging rebuke on Prinsjesdag (Budget Day). Out of €6 billion in total tax increases for 2027, €5.8 billion will fall on working citizens through income tax hikes. Meanwhile, the tax burden on large corporations and high-wealth individuals is actually decreasing slightly Source: NL Times.

The council warned this is a “dangerous long-term strategy” given the aging population: relying on a shrinking pool of workers to fund healthcare, education, and social security is fundamentally unsustainable. The higher taxes are expected to push purchasing power down by 0.1 percentage points.

Box 3 asset tax reform delayed again

The cabinet had hoped to introduce a new system for taxing assets (box 3) by 2028, replacing the fictional flat-rate model struck down by the Supreme Court in 2021. But junior finance minister Eelco Eerenberg is now likely to withdraw the bill from the Senate to address opposition criticism, pushing implementation to 2029 Source: DutchNews.

Right-wing opposition parties want a capital gains tax instead of taxing actual returns. In the meantime, the interim system with different fictional rates for savings, investments, and debts continues — meaning savers can still claim refunds if their actual returns are lower than the assumed rate.

What does this mean for expats?

If you work in the Netherlands, you will likely feel the tax increase in your paycheck. The 30% ruling for expats is not directly affected by this budget, but higher income tax brackets mean your net salary may shrink. If you have significant savings or investments in Dutch bank accounts or brokerages, the ongoing box 3 uncertainty remains: you are still taxed on fictional returns, but can file for restitution if your actual returns are lower.

For those on social security benefits (WW, WIA, AOW), the news is broadly positive: the planned cuts have been reversed. However, the long-term reform of the AOW (state pension) remains under discussion with employers and unions.

Can the cabinet pass the budget?

The minority cabinet still lacks a parliamentary majority. Jetten is courting opposition parties, particularly the pro-agriculture BBB, which could provide the needed votes in both the Tweede Kamer (lower house) and Eerste Kamer (senate). Talks are ongoing, with the cabinet presenting a revised proposal on September 25 that includes measures on purchasing power, social security, and box 3 Source: NL Times.

Left-wing parties Pro and Volt have welcomed the scrapping of social security cuts, while right-wing parties JA21 and SGP are pushing for tougher migration measures and a capital gains tax. The coming weeks will determine whether the budget passes — and whether expats and internationals can expect further changes to their tax and benefit situation.