30% ruling referred to European Court of Justice

Posted on 12th January, 2014

Estimated reading time 3 minutes

30% ruling referred to European Court of Justice

The 30% ruling, which allows Dutch employers to pay a tax-free allowance to employees recruited from abroad, has been referred to the European Court of Justice.

Under current law, employers may pay a fixed tax-free allowance of up to 30% of salary to expatriate employees who, for at least 16 of the 24 months before their employment in the Netherlands, were normally resident more than 150 kilometres from the Dutch border.  This ruling has been challenged by an employee who moved to work in the Netherlands for a Dutch employer, but was refused the 30% allowance by the Dutch tax authorities, because he did not satisfy the ‘150 kilometre’ rule.  The employee claimed that the tax authorities’ decision violated EU law. 

After the Dutch Supreme Court failed to reach a decision on the case, the matter was referred to the European Court of Justice.  In an opinion issued on 13 November 2014, Advocate General Kokott said that the 150 kilometre condition was not in principle against EU law provided that it was proportional.  It is now up the Dutch Court to determine whether the condition is proportional, according to the criteria set out by the Advocate General. 

It is not known how the Dutch Court will rule, or whether further conditions may be applied to the 30% ruling.  A decision is expected in Spring 2015 and further information will be provided at that time.


The CELIA website Newsbank also contains previous articles on the 30% ruling.  Please search under Netherlands/Tax and social security.

Further information

For further information or to discuss any of the issues raised, please contact Rina Driece, Loyens & Loeff Rotterdam, +31 10 2246424, rina.driece@loyensloeff.com


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