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Written by:
Bas Hollenberg


Final decision on 150 kilometre limit as part of 30% ruling

The European Court of Justice in response to Netherlands Supreme Court questions concerning the 150 kilometre limit as part of the 30% ruling in 2015 issued a preliminary ruling, the upshot of which was that the limitation was permissible and did not entail any indirect discrimination against the free movement of workers or pose any obstacle thereto.

The Supreme Court with due observance of the European Court’s ruling has now issued its final decision. According to the European Court of Justice, it is only where the 30% ruling systematically gives rise to clear overcompensation of actually incurred extraterritorial expenses that there is a question of indirect discrimination against, or frustration of, the free movement of workers, the Supreme Court in the light of the above having decided that the legislator has sought to reconcile the exemption with the actually incurred extraterritorial expenses.

The Advocate General examination’s has failed to confirm the 30% ruling as systematically giving rise in practice to clear overcompensation of actually incurred extraterritorial expenses, with the Supreme Court noting as an aside that the European Court’s deliberations concerning systematic overcompensation were confined to inbound workers who in the past had lived more than 150 kilometres away from the Dutch border and whose extraterritorial expenses according to the Supreme Court’s assumption could generally be assumed to be greater than those incurred by other inbound workers, and which group therefore would experience clear overcompensation to a lesser degree than the aggregate group of inbound workers. Although the use of a fixed payroll percentage may give rise to overcompensation for high earners in particular, this does not necessarily prompt the conclusion that the scheme as such systematically gives rise to clear overcompensation.

Read our article : Supreme Court upholds 150 kilometre minimum

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