• Service: Tax, Global Compliance Management Services, International Tax
  • Type: Regulatory update
  • Date: 5/7/2014

Netherlands - EC opposes 150-kilometer limit under 30% tax relief 

May 7: The European Commission presented its position in a case pending before the Court of Justice of the European Union (CJEU) concerning the 150-kilometer limit for purposes of the “30% tax relief” in the Netherlands—i.e., foreign employees with specific expertise, that is deemed to be scarce in the Dutch labor market, are eligible for a 30% tax relief benefit.


Under the tax relief (provided certain conditions are satisfied), 30% of an eligible employee’s salary is treated as a tax-free allowance to cover additional expenses incurred because the employee is temporarily living and working outside his or her home country. The remaining 70% is treated as taxable salary.

The Dutch Supreme Court referred the case to the CJEU in August 2013. Read TaxNewsFlash-Europe.

EC’s position

In presenting its position, the EC noted that employees from abroad who resided less than 150 kilometers from the Dutch border, during more than two-thirds of the 24 months preceding the commencement of their employment or secondment in the Netherlands, are not eligible for the 30% tax relief. According to the EC, the 150-kilometer limit is a prohibited restriction on the free movement of workers. Rather, the EC stated that it prefers a less far-reaching measure, such as a criterion based on the commuting distance.

It remains to be seen to what extent the CJEU will take account of the EC arguments in the case pending before it.

Read a May 2014 report prepared by the KPMG member firm in the Netherlands: European Commission: 150-kilometer limit as assessment criterion for 30% ruling is prohibited restriction

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