My employer messed up my tax ruling

Sergio T17 Member

Member since 01 November 2023

Sergio T17Member01 November 2023 17:18:13

Hello everyone! Please help with advice on the following situation:

1) An employee started working for a Dutch company as a contingency worker through a British recruiting company. The employee's contract mentioned a "special tax rate - 30%" condition, which implied a tax ruling.

2) During the initial months, the British company paid the employee a gross amount based on invoices submitted by the employee. Later, the employee was transferred to the Dutch payroll, and taxes were withheld from their earnings. Throughout this time, the British company promised to apply for a tax ruling for the employee but never fulfilled that promise.

3) After 6 months of work, the employee switched to a new recruiting company based in the Netherlands but continued to work for the same Dutch client. A lawyer from the new recruiting company stated that applying for a tax ruling was impossible because the employee was initially not transferred to the Dutch payroll and received payments through invoices, which meant that, from a tax perspective, the employee was considered self-employed.

4) The employee reached out to their former employer, the British company, to resolve the situation. They were offered some compensation, significantly lower than the missed income in the form of tax deductions.

5) Following this, the employee consulted an attorney. The attorney mentioned the possibility of preparing a non-judicial settlement agreement.

Any recommendations and thoughts on how to proceed here?

Cynic UK/Netherlands Expert

Member since 15 September 2015

CynicUK/Netherlands Expert02 November 2023 09:26:09

7836

Hi and welcome to the Forum.

First off - I'm not a tax advisor, so my first piece of advice is to speak to a Dutch tax advisor, just because someone is a lawyer, does not make him/her an expert in tax matters.

I'm assuming that although you have been careful to make your case in the 3rd person, it is in fact you we are talking about and you are actually living in the Netherlands.

A non-judicial settlement agreement is an agreement that does not involve the law, so should either side cease to exist, the agreement would also cease to exist.聽 If you are in fact working for a British company (i.e. not having a contract with the Dutch people you are working for), then you are definitely sailing in unknown waters as far as I'm concerned.

You should be aware that any compensation paid to the employee would likely be assessed as income in the Netherlands and may be subject to whatever taxes are applicable (both working and social taxes).

The 30% tax facility rule is an agreement between the Dutch taxman (Belastingdienst) and the Dutch Employer; you should note that it is "up to 30%", there are things about your personal situation that may reduce it.

Assuming that you qualified (your contract is not binding on the Belastingdienst; they may still say no), I recall that retrospective claims were permitted for up to 4 months after you started work; if it somehow got forgotten, then it becomes effective as of the first day of the month following the month of application, it is still valid for what the current duration allowed (I think 5 years), so you will not miss out.

I think you need to have a cup of coffee with your boss and discuss what has gone wrong and then they speak to the Belastingdienst to work out something.聽 In my own opinion, you have lost nothing except a commitment to work for the company so you can get the maximum benefit of your tax-break.

I hope this helps.

Cynic

Expat Team