Expats: 150 km limit for the 30% rule is not contrary to EU law

Recently, the Supreme Court ruled that the 150 km limit for the 30% rule is not contrary to EU law. This means that foreign employees who work in the Netherlands can only apply the 30% rule if they lived for more than two thirds of the 24 months prior to their employment at least 150 km from the Dutch border.

The 30% rule is a flat-rate scheme used as compensation for costs associated with the temporary stay outside the country of origin (extraterritorial costs). The employer may reimburse these employees 30% of their salary untaxed. On 1 January 2012, the scheme at the time was tightened up with the condition that the employees must have lived for at least two thirds of the 24 months prior to the Dutch employment at a distance of more than 150 km outside the Netherlands. Different legal actions where initiated concerning whether that condition was contrary to European law. For employees who could not apply the 30% rule, employers could reimburse the actual extraterritorial costs untaxed.

The European Court of Justice ruled earlier that the scheme is not contrary to EU law, unless it would systematically be a clear overcompensation with respect to the actual extraterritorial costs incurred by the foreign employee.

The Dutch Supreme Court has now ruled that there is no such overcompensation because the legislature based the percentage of 30 on factual research and attempted to relate this to the actual costs incurred.

This means that employees who spent more than eight of the 24 months prior to their employment in the Netherlands within 150 km of the Dutch border are no longer eligible for the 30% rule. These employees can be reimbursed their actual extraterritorial costs untaxed. The other employees who arrived previously can still claim the 30% rule.

If you have any questions about this matter, please do not hesitate to contact us.

Meer informatie?

Martijn van der Kroon
+31 (0) 6 11 51 03 85
martijn.vanderkroon@cb-more.com

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