Redundancy

Package

Made redundant

 

Last modified: 21 January 2015


Unfortunately a lot of people are made redundant. Often a redundancy package can be arranged, the so called golden handshake. The amount mainly depends on the time you worked for the company. 

The amount of the redundancy package can be calculated with the so called kantonrechtersformula (till 1 July 2015).

 

Of course there are tax consequences. The redundancy payment is considered to be taxable salary. Be advised that the 30% ruling is not applicable on the payment. This has been confirmed by the Supreme Court.

 

When you get a redundancy package you can/could choose out of three options:

 

1. Payment of a lump sum to your bank account

2. Income insurance from an insurance company or a savings scheme from a bank (no longer possible from 1 January 2014)

3. Income insurance from your own limited company (no longer possible from 1 January 2014)

 

1. Payment of a lump sum to your bank account

 

Normally when you are made redundant the employer will pay the redundancy package in one amount. The employer can also decide to pay you in monthly installments combined with a social security payment from the government but we will not discuss this further.

 

The lump sum will be normally taxed. So this means that the whole amount will be taxed together with your other income during the year. The higher the income and lump sum the sooner you will be in the highest tax bracket of 52%. When normally your salary isn't taxed against 52% the lump sum leads to a higher average taxation.

 

2. Income insurance from an insurance company or a savings scheme from a bank

 

No longer possible from 1 January 2014.

 

3. Income insurance with your own limited company

 

No longer possible from 1 January 2014.

 

Questions answered in our Knowledge Base:

 

Emigration and redundancy package


Emigrating from the Netherlands doesn't mean you get rid of the Dutch tax authorities unless you have been working for an international company with branches in several countries and were made redundant while you were already living and working outside the Netherlands again. But most of the time you will have been made redundant by your Dutch employer or a Dutch branch of your international employer.

 

If the periodical payments or the redundancy package are paid out of the Netherlands, the Dutch tax authorities can tax these payments based on the Dutch tax laws. Since also the country of (new) residence will like to tax these amounts the Netherlands have created tax treaties with most of the countries. In these tax treaties a difference is made between:

  • a payment for the loss of salary
  • a payment for the loss of pension


If the redundancy package is paid to cover loss of salary, the whole amount is taxed in the Netherlands. If the package is paid to cover the loss of pension, the package is taxed in the country of residence. A combination of both is possible. The employee has to prove that (part of) the package is granted to cover the loss of pension. This must be clearly stated in the agreement with the employer. Also the age of the employee is relevant and the calculation of the total amount of the package.

 

Source: Court The Hague 15-5-2001 after referral from the Supreme Court on 3-5-2000

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Social security Unemployed