Dutch Supreme Court rules on taxation of excessive leaving bonuses
On 20 June 2014 the Dutch Supreme Court ruled that the employer tax due on excessive termination payments is not contrary to international law.
In early 2013 we updated you on the Dutch employer tax due on so-called excessive redundancy payments – please refer to our previous article.
This employer tax must be calculated by taking into account salary earned prior to the legislation entering into force on 1 January 2009 is According to the Supreme Court this retroactive action does not contravene Article 1 of Protocol 1 to the European Convention on Human Rights as it serves to prevent tax evasion opportunities.
In the court case in question the facts did not support the contention that the employer tax created an individual excessive burden. If that had been the case, the outcome may have been different.
There are similarities with the new case law on the 16% crisis tax since for the crisis tax salary earned prior to the relevant legislation entering into force is taken into account as well. Please see our separate article on this subject.
In both cases, an appeal may succeed if it can be shown that the tax creates an individual excessive burden but each case must be considered on its own merits by reference to its own facts and circumstances.
Content is for general information purposes only. The information provided is not intended to be comprehensive and it does not constitute or contain legal or other advice. If you require assistance in relation to any issue please seek specific advice relevant to your particular circumstances. In particular, no responsibility shall be accepted by the authors or by Abbiss Cadres LLP for any losses occasioned by reliance on any content appearing on or accessible from this article. For further legal information click here.
Circular 230 disclosure
To ensure compliance with requirements imposed by the IRS and other taxing authorities, we inform you that any tax advice contained in this article (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties that may be imposed on any taxpayer or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.
If you would like to copy or otherwise reproduce this article then you may do so provided that: (1) any such copy or reproduction is for your own personal use or if it is made available to any third party it is done so on a free of charge basis; and (2) the article is reproduced in full together with the contact details, disclaimer and any logos as they appear on each article.