Specific expertise 30%-ruling

Published: 08-09-2011

Rejection of the 30%-ruling

The 30%-ruling is a facility in the Dutch payroll tax system for incoming employees who leave their country of origin temporarily to work in the Netherlands. The employee must be an incoming employee who can be regarded as an extraterritorial employee.

Extraterritorial employees are incoming employees who have specific expertise which is scarce or absent in the Dutch labor market.  These employees are either sent by an foreign employer to the Netherlands or they  are recruited from abroad by an employer in the Netherlands (who is a withholding agent  for wage tax in the Netherlands).

Recently the Court in Den Bosch ruled on the requirement that expertise must be scarce on the Dutch labor market.

The case was as follows:
In 2008 a football club (employer) was looking for a new head coach. For the position of head coach the football club had drawn up a list of skills and qualifications which must be met. Based on this list only two suitable candidates were found. A Belgian individual fulfilled the criteria of the football club and was offered the position of head coach.  The individual and employer requested the 30% ruling from the Dutch tax authorities.

The Dutch tax authorities rejected the request because, according to the tax authorities, the condition that the expertise must be scarce on the Dutch labor market was not fulfilled. 

The individual and employer filed an appeal at The Breda District Court and the Den Bosch Court. Both the  Breda District Court and the Den Bosch Court  dismissed the appeal as unfounded.

The Breda District Court ruled that the employer had not sufficiently proved that the expertise was not available on the Dutch labor market and therefore had to be hired from abroad. The Den Bosch Court was of the opinion that the criteria which the football club set for possible candidates was too limited. The football club ruled out candidates who wanted too high a salary, who were too old or who had recently been laid off. According the Court these candidates still counted as "available". By expanding the criteria the number of persons who met the requirements came to thirteen, and according to the Court the number of qualified candidates in the Netherlands cannot then be considered “scarce”.

Conclusion:
It is possible that the 30% ruling is not granted by an inspector at the time a contract commences if the specific expertise of the employee is not considered scarce on the labor market. The criteria the employer draws up for suitable candidates is reviewed objectively to see if it is possible that there are enough candidates within the Netherlands who are "available" for the same function. 

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