The law provides that the withholding agent must apply the co-called 'anonymous rate' if one of the following situations occur:

1. The withholding agent does not receive the necessary employee payroll information from the employee (before the first working day or on the first working day if the employee is technically hired on this day), or the withholding agent does not properly identifies the employee (which includes, amongst other things, the obligation to establish the permanent living address in or outside the Netherlands).
2. The withholding agent does not keep proper records and does not store the necessary data correctly with the payroll administration.
3. The withholding agent knows or reasonably should have known that employee payroll information provided by the employee is not correct.

A typical example for a situation where the anonymous rate must be applied is the situation in which the employee is not able to provide a BSN number at his/her first working day.   

When the withholding agent applies the anonymous rate, the withholding agent must withhold 52% (2020) salary tax. The withholding agent may also not take standard deductions and allowances into account.

If, during a later tax period, the default which triggered the application of the anonymous rate is repaired, the application of anonymous rate in earlier periods may not be reversed. The application of the anonymous rate may only be reversed if it is applied erroneously, because the withholding agent did already properly complied to its legal obligations, but the information was just not processed in time.   

The employee can claim back the withheld excessive payroll tax (if any) in his/her annual income tax return.

Go to >   The payroll service package of TAXci

Go to >    Index page - Payroll obligations in the Netherlands