News - Netherlands

Netherlands - August 2013

Dutch 30%-tax ruling under review by European Court of Justice

On 9 August 2013, the Dutch Supreme Court raised questions with the European Court of Justice as to whether the 150 km-requirement in the 30%-ruling is in conflict with European legislation.

The 30%-ruling is a Dutch tax incentive for employees hired from abroad in the form of a tax free allowance of ‘extraterritorial’ expenses.

In order to qualify for the 30%-ruling, employees must have lived outside a radius of 150 km (straight line) from the Dutch border during more than 2/3 of the 24 months preceding their employment in the Netherlands.

If employees do not fulfil this requirement, the actual extraterritorial expenses can be reimbursed tax free. However, the allowance in general exceeds the actual expenses, thus enabling trade and industry to attract expertise from abroad. Such tax benefit is denied to employees coming from within the 150-km zone. .Pending the Court’s reaction, it is advisable to protect the position of employers and employees by lodging an objection against a negative decision of the Dutch tax office on a 30%-ruling application.

For further information or to discuss the consequences of the above, please contact Rina Driece, (rina.driece@loyensloeff.com) on +31 10 224 6 424 at Loyens & Loeff Rotterdam.

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