Cross-border Impact Assessment 2019

Dossier 1: 90%-rule

Entire dossier

The entire dossier is available here in Dutch and English.

This year’s impact analysis of the Dutch Qualifying Foreign Taxpayers’ Obligation (kwalificerend buitenlandse belatsingplicht, KBB) including additional data for 2017 confirms the conclusion of the 2018 impact assessment that there is no evidence of an effect on the numbers and flows or cross-border workers to the Netherlands. At the same time, this dossier presents instructive visualisations of the characteristics of the diverse population of cross-border workers in the Netherlands and its development over time in relation to labour and residential mobility.


Johan van der Valk

Myrte ter Horst

Prof. dr. Maarten Vink

The qualifying foreign taxpayer obligation (kwalificerende buitenlandse belastingplicht, hereafter: KBB), which entered into force on 1 January 2015, establishes that non-resident taxpayers in the Netherlands may benefit from the same deductions and tax credits as resident taxpayers only if they earn at least 90% of their worldwide income in the Netherlands. They are excluded from this rule if their income is below this threshold. The KBB may affect the labour mobility and housing mobility of cross-border workers who earn less than 90% of their worldwide income in the Netherlands and do not have sufficient taxable income in their country of residence.

In the ITEM Cross-Border Impact Assessment 2018, a preliminary ex-post impact assessment was carried out to analyse whether there were significant changes in the number of non-resident workers in the Netherlands after the introduction of the KBB. This analysis for the period 2013-2016 showed that no departure from the trend was visible. In the current edition of the Cross-Border Impact Assessment, the analysis is extended with two new elements in order to carry out a better ex-post impact assessment. In this edition we used a longer time series, namely from 2012 to 2017, to identify any delayed effects and to establish any departures from the trend more accurately. The second new element concerns a longitudinal analysis, in which each employee is examined to see how their living or employment situation changes over time.

The figures in the report show the number of non-resident employees by country of residence over the years 2012-2017. The number of non-resident employees living in Poland and in other countries increased over the period 2012-2017. The numbers of non-resident employees living in neighbouring countries Belgium and Germany remained more or less the same over the period 2012-2017. The figures in the report show that this is the case for both Dutch nationals living in Belgium or Germany and Belgians living in Belgium. However, the number of German non-residents living in Germany clearly decreased between 2012 and 2017. The figures do not show any striking changes in the number of nonresident employees between the period before the introduction of the KBB (2012, 2013, 2014) and the period after the introduction of the KBB (2015, 2016, 2017).

As the focus of this dossier is on estimating the possible effects of the KBB on the border regions, in this analysis we focus on non-residents living in the neighbouring countries Belgium and Germany. Both figures show that more people started working in the Netherlands year on year from 2012 to 2017 while they lived in Belgium or Germany in the year they started working. In addition, fewer non-residents living in Germany have stopped working in the Netherlands year on year. There are no noticeable changes in the number of people working in the Netherlands who moved to and from the Netherlands. The analysis therefore shows that labour mobility is greater than housing mobility, and that no striking changes took place after the introduction of the KBB.

The analysis therefore gives no indication that the KBB influences the number of non-resident employees in the Netherlands. The number of people living in Belgium or Germany and working as employees in the Netherlands has been fairly stable since 2015. The longitudinal analysis also does not indicate that more foreign employees are suddenly moving back to the Netherlands since 2015 or that the Netherlands has suddenly become less attractive as a working country for people living in neighbouring countries. We therefore do not see any noticeable changes in housing and labour mobility since the introduction of the KBB.

Although we do not find any evidence that the KBB has an effect on the number of non-resident workers and their behaviour in terms of housing and labour mobility, this does not alter the fact that individuals may be burdened by the legislation. As a result of the KBB, non-resident employees may be faced with administrative burdens that they would not have been burdened with in the absence of this law.

We recommend continuing to monitor figures on cross-border commuting over a longer period. It is, of course, possible that effects do not occur immediately but require more time to become visible. A longer time series would therefore be required to investigate this.