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Sopora : A Welcome Landmark Decision on Horizontal Comparison

Sopora : A Welcome Landmark Decision on Horizontal Comparison ec Editorial XL TAX REVIEW 2015­4 Eric C.C.M. Kemmeren* 1 INTRODUCTION On 24 February 2015, the European Court of Justice's (ECJ) Grand Chamber handed down its decision in the Sopora case.1 This case dealt with the Dutch 30% wage tax facility (in terms of the ECJ: flat-rate rule).2 This optional allowance is open to foreign high-skilled expatiates who take up employment in the Netherlands. Basically, the allowance grants a fixed exemption of 30% of the employment income without the provision of further proof. The 30% exemption may be granted, even if that amount exceeds the extraterritorial expenses actually incurred. This can lead to overcompensation. However, it remains possible to produce proof of higher expenses incurred and to obtain an exemption for that reimbursement up to the amount of those expenses. If the 30% allowance cannot be invoked because the conditions are not satisfied, the expatriates' tax-free reimbursement is always limited to the demonstrable actual amount of the extraterritorial expenses. In such a situation an expatriate cannot benefit from the administrative simplification of the claim for those extraterritorial expenses. As from 2012, the scope of the 30% allowance has been restricted. Prior to their employment in the Netherlands, the http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png EC Tax Review Kluwer Law International

Sopora : A Welcome Landmark Decision on Horizontal Comparison

EC Tax Review , Volume 24 (4) – Aug 1, 2015

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Kluwer Law International
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Copyright © Kluwer Law International
ISSN
0928-2750
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Abstract

ec Editorial XL TAX REVIEW 2015­4 Eric C.C.M. Kemmeren* 1 INTRODUCTION On 24 February 2015, the European Court of Justice's (ECJ) Grand Chamber handed down its decision in the Sopora case.1 This case dealt with the Dutch 30% wage tax facility (in terms of the ECJ: flat-rate rule).2 This optional allowance is open to foreign high-skilled expatiates who take up employment in the Netherlands. Basically, the allowance grants a fixed exemption of 30% of the employment income without the provision of further proof. The 30% exemption may be granted, even if that amount exceeds the extraterritorial expenses actually incurred. This can lead to overcompensation. However, it remains possible to produce proof of higher expenses incurred and to obtain an exemption for that reimbursement up to the amount of those expenses. If the 30% allowance cannot be invoked because the conditions are not satisfied, the expatriates' tax-free reimbursement is always limited to the demonstrable actual amount of the extraterritorial expenses. In such a situation an expatriate cannot benefit from the administrative simplification of the claim for those extraterritorial expenses. As from 2012, the scope of the 30% allowance has been restricted. Prior to their employment in the Netherlands, the

Journal

EC Tax ReviewKluwer Law International

Published: Aug 1, 2015

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