That question is raised in a ruling which the Supreme Court handed down on 4 May 2018.
Migrant worker
A migrant worker is someone who works in a place far removed from their (original) place of residence. The free movement of capital and labour is one of the factors contributing to the large number of such migrant workers within the European Union. Furthermore, in our knowledge-based economy, many companies rely on talented individuals from abroad. In such cases, the term often used to refer to the migrant worker is expat.
Collective Labour Agreement for the Construction Industry
The collective labour agreement for the construction industry stipulates that the employer must bear the costs of accommodation for migrant workers. This is subject to the condition that the employee’s home is so far from the place of work that it would be unreasonable for the employee to return home every day.
The FNV considers that the place of residence of a migrant worker in the construction industry (in this case, Polish and German construction workers) is their home in their country of origin (in Poland or Germany). The employer must therefore, under the terms of the collective labour agreement, provide free accommodation in the Netherlands.
The Supreme Court has declared the FNV’s appeal in cassation to be unfounded. According to the Supreme Court, the term ‘dwelling’ in the collective labour agreement for the construction industry refers to: “the place … where the employee has his habitual residence for the duration of the work. This may be the temporary residence to which the employee returns every day after work and where he sleeps, but it may also be a home or place of residence situated further away from the workplace.”. This must be determined in the light of the specific circumstances of each case.
The Supreme Court does not apply the criterion centre of social and economic interests of the employee. That criterion does, however, play a role in determining tax residence. See our article Tax residence in two countries.
Double costs
Migrant workers often face double costs, including for accommodation. They usually have a home in their country of origin. In addition, they have to pay for accommodation in the Netherlands. This extraterritorial costs may be reimbursed or provided by the employer on a tax-free basis. This is often done by applying the 30% scheme. We describe this scheme in our memorandum Tax-free allowance for expatriates (30% scheme). In the recent update to this note, we describe the changes to the 30% scheme proposed by the Government.
If the 30% scheme is not applied, but the employer reimburses the migrant worker for the actual extraterritorial costs, it must be demonstrated what actual double costs the migrant worker has incurred. The Tax and Customs Administration imposes fairly strict requirements on such evidence. The employer must demonstrate that the migrant worker actually incurs accommodation costs in their country of origin. This can be done by proving that rent is being paid, or that the migrant worker owns the property in which they live in their country of origin. Young people who live with their parents in their country of origin are usually unable to prove that they incur accommodation costs there. As a result, the Tax and Customs Administration refuses to grant tax-free allowances or the provision of accommodation in the Netherlands.