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Written by:
Bas Hollenberg


Preliminary questions 150km border in 30%-ruling

A Dutch employer can grant an employee that they have recruited from abroad 30% of their salary tax-free. The 30%-ruling was tightened on 1 January 2012 so that only employees who live more than 150km beyond the Dutch border were eligible. Employees who lived in another member state but within 150km of the Dutch border could only receive the actual costs reimbursed tax-free. These employees were treated different fiscally than EU employees who lived beyond 150km of the border.

The following case questioned whether the different treatment of these employees infringes on worker's right to free movement within the EU. The case involved a man who worked for an employer based in Germany and who was then employed by a company affiliated to his employer’s in Rotterdam. The man lived in a place in Germany which lay less than 150km from the Dutch border in the 24 months before his new employment. When working in the Netherlands during the weekdays he rented an apartment there.

The man requested the 30%-ruling. The tax authorities rejected his request on the grounds that the man did not live more than 150km beyond the Dutch border for more than two thirds of the 24 months prior to his employment in the Netherlands.

The Breda Court has ruled that the limit of 150km did not infringe on EU law and that the limit is not in conflict with the concept of equality as intended in Article 26 IVBPR and Article 24 EVRM. The man has appealed against the decision of the Court.

The Supreme Court is uncertain if the different treatment of employees infringes on the right to free movement of workers and has for this reason asked preliminary questions to the Court of Justice. The questions are based on the fact that the 30%-ruling allows a deduction higher than the actual costs and the proportionality of the new limits.   

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