Employees from abroad who possess specific expertise that is in short supply on the Dutch labour market may be paid a tax-free allowance of 30% of their total remuneration. This is a flat-rate tax-free allowance for their extraterritorial expenses; the additional costs associated with their temporary stay in the Netherlands. This scheme is also known as the 30% scheme.
Since 2012, a condition has been added to this scheme stipulating that, prior to starting work in the Netherlands, the employee must not have resided within 150 kilometres of the Dutch border. Naturally, the question of whether this condition is discriminatory has been put before the court.
In response to this question, the Court of Justice of the European Union recently ruled that there is no discrimination, unless it transpires that the flat-rate scheme systematically results in clear overcompensation in relation to the costs actually incurred by the foreign worker. This will now have to be examined by the Dutch court.