What was the situation?
This case concerned an individual with the Jordanian nationality who came to the Netherlands to study in April 2014. After she arrived in the Netherlands in April 2014, she immediately registered herself on a Dutch address with the Dutch Municipal Personal Records Database (BRP), conducted a health insurance and opened a bank account in the Netherlands. She was granted a residency permit for study purposes. After she graduated in September 2015, she wished to stay in the Netherlands to search for a job and therefore applied for a residency permit for the purpose of ‘orientation year highly educated persons’. This residence permit was valid for one year. In April 2016 she started her new job in the Netherlands and in December 2016 she and her employer filed a request for the application of the 30%-ruling. The Dutch Tax inspector rejected the request and took the position that she was not hired from abroad and already considered a resident taxpayer of the Netherlands, according to Dutch tax legislation (i.e. article 4 AWR), at the time the employment agreement was conducted. The individual lodged for an appeal, but the Court considered the appeal to be ungrounded.
The considerations of the Court of Appeal
The Court of Appeal in Amsterdam did not follow the position taken by the Dutch tax inspector and the Court. The fact that the individual studied in the Netherlands for an uninterrupted period of 1.5 years and subsequently stayed in the Netherlands to find a job is not sufficient enough to have sustainable ties with the Netherlands. An important argument the Court brought in is that the residency permits were only valid for a limited period of time and that it was unsure whether the individual could legally stay in the Netherlands after the residence permits expired. The fact that she has a place to stay in the Netherlands, conducted a health insurance and opened a bank account in the Netherlands were also not enough to conclude that she has sufficient sustainable ties with the Netherlands.
The Court of Appeal in Amsterdam eventually decided that she is not considered a resident taxpayer of the Netherlands at the time she conducted the employment agreement and that she is therefore eligible for the 30%-ruling.
The decision of the Court of Appeal (Gerechtshof) is from 29 October 2019, which you can read here in Dutch.
What will be the impact of the decision?
This is what we call a remarkable decision from the Court of Appeal in Amsterdam and once again points out that the Dutch tax residency position, according to article 4 AWR, is flexible and provides room for interpretation. Especially, since the 30%-ruling and Dutch tax residency are inextricably linked to each other, this decision may open doors for individuals who are already residing in the Netherlands and still want to apply for the 30%-ruling.
This publication has been created in collaboration with mr. Daniel van den Helder, a colleague of mine.
Please contact me if you have questions in a specific case.