Global

Details

  • Service: Tax, International Executive Services, Global Compliance Management Services, International Tax
  • Type: Regulatory update
  • Date: 11/25/2013

Netherlands - Status of repeal of severance-related annuity provisions 

November 25: The Dutch lower house on 19 November 2013 passed the Tax Plan 2014—including provisions to repeal an annuity exemption and to provide rebate rules for the surrender of existing annuity entitlements.

The bill now will be considered by the upper house, with the plenary debates and vote expected 16 and 17 December 2013.

Background

Under the Tax Plan 2014, two annuity-related provisions relating to employee severance payments would be repealed, effective 1 January 2014:


  • An “annuity exemption”
  • A requirement that existing annuity entitlements must be disbursed in installments

“Rebate rules” would apply to existing annuity entitlements that are “fully surrendered” or paid in a lump sum in 2014 (in such situations, only 80% of the surrendered amount would be taxed).


Read TaxNewsFlash-Europe: Netherlands - Repeal of annuity-related benefits for severance payments

Effect of repeal

Assuming repeal of the annuity exemption is enacted, transitional rules would apply to existing annuity entitlements as of 31 December 2013, and possibly apply to redundancies in 2014.


To invoke the transitional rules—


  • The nature and the extent of the exempted annuity entitlement must have been sufficiently determined or be sufficiently determinable as of 31 December 2013.
  • The agreement must show that the amount used for the financing of the entitlement has been deposited with a service provider designated by law, and the date of dismissal must be known.

Read a November 2013 report prepared by the KPMG member firm in the Netherlands: Annuity exemption may also apply to redundancy in 2014, subject to conditions




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