Supreme Court upholds crisis levy due on share-based remuneration | Deloitte Netherlands

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Supreme Court upholds crisis levy due on share-based remuneration

The Supreme Court upholds the crisis levy on shares that a shareholder provided to its managers with the employer's knowledge, as this qualifies as wages paid within the group.

28 January 2022

Pseudo final levy on high wages

The Tax Administration has imposed an additional assessment on the interested party in connection with the pseudo final levy on high wages (referred to as the ‘crisis levy’ [crisisheffing]) due on shares that were issued at a symbolic value to members of the interested party's management in 2012. The shares were not issued by the interested party itself, but by one of its shareholders (Y), which held an indirect interest of 1.3% in the interested party. Y was founded by two private equity parties that were independent of each other and together held a majority interest of 72.6% in the interested party.

The matter in dispute is not that the benefit was taxed as wage at the level of the managers, but rather whether it qualified as ‘wage paid within the group’ (eigen loon) that is subject to the crisis levy. The Supreme Court previously ruled that the situation in which a benefit is provided within the group by another group company with the employer’s knowledge, must be equated with the situation in which a third party provides a benefit on the instructions and at the expense of the employer. In that case, the benefit qualifies as wage paid within the group.

However, the interested party argued that qualification as wage paid within the group was out of the question since Y and the interested party cannot be regarded as group companies due to the small size of the shareholding. Thus, the benefit should be regarded as wage paid by third parties, and the tax assessment would have to be annulled.

Wage paid within the group

The Arnhem-Leeuwarden Court of Appeal dismissed the interested party’s appeal, arguing that considering the group relationships, this effectively concerned wage paid within the group. The Supreme Court agreed. With reference to its previous case law, the Supreme Court ruled that the Court of Appeal, in view of the facts and circumstances of the case, was correct in considering this to be wage paid within the group subject to the crisis levy. This does not alter the fact that Y and the interested party, in view of the ownership and voting rights relations, are not connected to each other and are not, in a civil-law sense, group or subsidiary companies either.

Consideration Deloitte

Regrettably, the judgment does not clearly define the concept of a group company. Certainly with regard to final levies owed, it is important for employers to know whether a payment to an employee by one of the shareholders is regarded as wage paid by the company. In that case, employers may in certain situations be liable for the final levy, even without having paid the wage to the employees themselves. New case law will have to show which situations qualify as wage paid within a group, or not.

For that matter, it is questionable whether the judgment can be applied on a one-to-one basis to the final levy on early retirement schemes (regeling vervroegde uittreding, or RVU)) and on excessive severance payments, as the legal texts for these final levies are slightly different than those for the now abolished crisis levy. For example, the final levy on early retirement schemes requires that the burden falls on the withholding agent, which does not seem to be the case here. Also on that point, new case law will have to provide more clarity.


Source: HR 14 January 2022, 21/00836, ECLI:NL:HR:2022:15

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