NETHERLANDS – Preliminary ruling on the 150 km criterion of the 30% regime

Nicolas de Limbourg 27 February 2015


On 24 February 2015, the European Court of Justice (‘ECJ’) issued a preliminary ruling on the question whether the 150 km criterion of the 30% regime for incoming workers is to be upheld.

The 150 km criterion applies to the 30% regime since 1 January 2012. Employees residing at a distance of less than 150 kilometres from the Dutch border for one third or more of the 24 months preceding their recruitment in the Netherlands do not (any longer) qualify for the 30% regime as from 1 January 2012. In fall 2013, the Supreme Court of the Netherlands (‘Supreme Court’) referred to the ECJ for a preliminary ruling on the question whether the 150 km criterion is to be upheld. In November 2014, Advocate General Kokott gave her opinion on this case, which served as a basis for the decision taken by the ECJ.

The ECJ has ruled that the 150 km criterion – in itself – does not conflict with the freedom of movement for workers within the EU. It may, however, be considered as conflicting with that EU principle if the limits set under the regime, i.e. ‘30% of the taxable base’ and the ‘150 km criterion’, have been established in a way that the 30% regime systematically results in manifest overcompensation compared to the extraterritorial expenses actually incurred. The ECJ has instructed the Supreme Court to examine whether this is the case.

Considering the condition set by the ECJ, we believe there is reasonable probability that the 150 km criterion will eventually have to be left outside of consideration when applying the 30% regime for being contrary to EU law. Therefore, employees concerned by this case law are advised to safeguard their rights in so far as they have not yet done so.