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Severance payment

This information is provided by: Netherlands Enterprise Agency

In the event of dismissal by mutual consent, you can agree a severance payment with your employee. The tax regulations depend on the type of severance payment: periodic payments or a lump sum, for example.

Periodic payments (annuity rights)

If you give your employee a severance payment to compensate them for their loss of wages, you can do so by using annuity rights, which means a claim to periodical payments. Since the annuity rights exemption has been cancelled, you can only do this by means of a taxed periodical payment.

Golden handshake

If you give your employee a sum of money in the event of dismissal, this will constitute a golden handshake. This amount is not considered to be wage subject to employee insurance contributions. However, the golden handshake is considered to be wage subject to wage tax/national insurance contributions and the income-related healthcare insurance contribution.

This information is provided by:

Netherlands Enterprise Agency

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