Dutch Supreme Court rules on taxation of excessive leaving bonuses

Posted on 7th January, 2014

Estimated reading time 3 minutes

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.


Supreme Court judgement dated 20 June 2014 (in Dutch language)

For further information or to discuss the consequences of the above, please contact Hans van Ruiten or Rina Driece on +31 10 224 6 424 at Loyens & Loeff Rotterdam - www.loyensloeff.com.


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