30% ruling referred to European Court of Justice

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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. Resources

• http://curia.europa.eu/juris/document/document.jsf?doclang=NL&text=&pageIndex=0&part=1&mode=DOC&docid=159560&occ=first&dir=&cid=150354
• Article 45 (Freedom of Movement) of Treaty of Rome

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 Disclaimer Content is for general information purposes only.  The information provided is not intended to be comprehensive and it does not constitute or contain legal or other advice.  If you require assistance in relation to any issue please seek specific advice relevant to your particular circumstances.  In particular, no responsibility shall be accepted by the authors or by Abbiss Cadres LLP for any losses occasioned by reliance on any content appearing on or accessible from this article.  For further legal information see our legal page. Circular 230 disclosure To ensure compliance with requirements imposed by the IRS and other taxing authorities, we inform you that any tax advice contained in this article (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties that may be imposed on any taxpayer or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein. Copying If you would like to copy or otherwise reproduce this article then you may do so provided that: (1) any such copy or reproduction is for your own personal use or if it is made available to any third party it is done so on a free of charge basis; and (2) the article is reproduced in full together with the contact details, disclaimer and any logos as they appear on each article.