Excessive severance payments in the Netherlands
When a Dutch withholding agent pays an “excessive severance payment” to an employee, the withholding agent must declare and pay a 75% pseudo-final tax over the excessive part of the severance payment.
When a Dutch withholding agent pays an “excessive severance payment” to an employee, the withholding agent must declare and pay a 75% pseudo-final tax over the excessive part of the severance payment.
A severance payment is excessive to the extent it exceeds a certain threshold. The threshold for the severance payment is € 559,000 (2020).
When the 75% pseudo-final tax become due, the withholding agent must file a declaration. A standard form is prescribed for this declaration and it must be filed hardcopy.
When the declaration is processed, an additional assessment will be levied specifying the amount due, the due date, wire details and the reference number to be used.