One of the proposed changes in Dutch tax law per the year 2014 regards the potentially tax beneficial treatment of severance payments. Till now such severance payments could be put in a standing right for the full untaxed gross amount. These standing rights could be held at 1. a bank on a blocked saving account, or 2. with an insurance company or 3. could be put in a standing right company (stamrecht BV) of which the shares are held by the person entitled to the severance payment. For more in depth information on the stamrecht BV facility, please see our article: http://www.okxvanleeuwen.com/?p=345
The proposed changes are that as of the year 2014:
• Existing standing rights may be paid out for the full amount with a 20% reduction of the taxable pay out;
• It is no longer allowed to put severance payments in a standing right, severance payments are to be taxed as a lump sum payment at the normal applicable progressional tax rate. The only possibility to reduce the increased tax rate could be through taking the average (middeling) of three cumulative tax years which includes the year of the severance payment.;
• As long as the termination agreement has been signed per the end of the year 2013 and in this agreement it is clearly mentioned that the employee wishes to make use of a standing right facility, there will still be time till on or before June 30th, 2014 to finalise the termination and set up a stamrecht company or blocked savings account;
• If the severance payment has been put in a stamrecht company or blocked savings account on or before November 15th, than the stamrecht provision may be fully paid out in 2014 with a tax benefit. This tax benefit is that the 20% of the pay out will not be taxed. The remaining 80% is taxed at progressional tax rate.
Please contact us if you wish any further advisory on stamrechten. We act as a one stop shop to incorporate a stamrecht BV and arrange all fiscal requirements. We offer a fixed fee of EUR 1,500 for arranging a stamrecht BV (including incorporation of a flex BV by a Notary).
We also advise on international tax issues in case of a migration. It may well be tax benificial to wait with the pay out of the stamrecht installments till you live abroad.
Please contact me at any time for more information:
Jan-Hein van Leeuwen
Tel. 06 4660 5520
Email. Jan-Hein@okxvanleeuwen.com