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 (i.e. extra costs for the withholding agent).  A severance payment is disproportionate to the extent the reference wage (based on a comprehensive formula) exceeds a certain threshold, which threshold is set at € 672,000 (2024). 

The withholding agent must file a declaration when the 75% pseudo-final tax becomes due in the prescribed standard form and must be filed in hardcopy.  An additional assessment will specify the amount, the due date, wire details, and the reference number.