There is a case currently before the courts in Germany concerning whether or not Germany should grant tax relief on the 30% allowance. This is important for employees who live in Germany and make use of the 30% facility in the Netherlands
There is a case currently before the courts in Germany concerning whether or not Germany should grant tax relief on the 30% allowance. It concerns a resident of Germany employed in the Netherlands. The 30% facility in the Netherlands applies to taxable income earned in the Netherlands. As the country of residence, Germany may tax the individual’s worldwide income, but under the tax treaty should grant relief from double taxation on the income related to Dutch working days. However, this is subject to the condition that Germany only grants a reduction in the tax to be paid if the income is actually taxed in the Netherlands. According to the German court in Düsseldorf, the 30% allowance constitutes a tax exemption and cannot be qualified as a fixed amount for extra-territorial expenses. By not granting an exemption on the 30% allowance, the benefit of this scheme is largely eliminated.
However, a higher appeal has been lodged against the Court’s ruling. We look forward to the follow-up proceedings with interest.
