Dutch crisis tax not incompatible with European Human Rights Convention

Posted on 1st January, 2016

Estimated reading time 3 minutes

On 29 January 2016, the Supreme Court of the Netherlands ruled that the one-off crisis tax, including its extension, is not incompatible with the ownership right of Article 1 of the First Protocol to the European Convention on Human Rights (ECHR).


For 2013, a one-off 16% crisis tax was introduced on annual salaries in excess of EUR 150,000.  This tax was also due on income such as bonuses, benefits in kind and severance payments paid to current employees at that time.  The legislature had initially proposed the tax as once-off, but then extended it by one year to 2014 (see previous article here) in order to reduce the budget deficit.

Recent ruling

Many employers believed the decision to extend the crisis tax was contrary to the ECHR and raised objections against the reintroduction. 

The Dutch Supreme Court ruled that the crisis tax:

  • is not incompatible with the statutory system of the wage withholding tax;
  • does not constitute impermissible discrimination with respect to employers that do not employ employees with salary of more than EUR 150,000; and
  • does not draw a (prohibited) distinction between employees, entrepreneurs or recipients of income from other activities.

The ruling also looked at whether the crisis tax constituted an unauthorized infringement of the peaceful right to one’s possessions (Article 1, FP ECHR).  Until the crisis tax was announced, employers were entitled to expect that they would not be taxed more heavily for salary received by their employees in a period than under the current legislation.  As a result of the introduction of the 16% crisis tax there would not be a “fair balance” unless the legislature could override these expectations for specific and urgent reasons.   

According to the Supreme Court, reducing the budget deficit should take priority (and given the simplicity and the feasibility of the measure), and due to this ruled that the extension of the crisis tax was also not incompatible with the ECHR. 

What does this mean?

It is reasonable to expect that the Supreme Court will continue to rule against taxpayers in the same way in cases brought against the crisis tax.

In light of earlier decisions by courts and courts of appeal, only in individual cases could there possibly be proof of an individual and excessive burden (due to the crisis tax) that is incompatible with the ECHR.

Further information

For further information or to discuss any of the issues raised, please contact Rina Driece on +31 10 224 6 424, Loyens & Loeff.

Further reading

Ruling ECLI: NL: HR: 2016: 121 (Dutch)



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