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Written by:
Bas Hollenberg


Commutation payment entitlement

The option in favour of commutation of periodic payment entitlement involving a reduced 80% tax charge ceases to be available at year-end 2014 for any such periodic payment entitlements as have been placed with a private company having specifically been incorporated for the purpose or with a bank, investment institution or insurance company.

The requirement of periodic payment entitlements having to be paid out in periodic instalments lapsed as at the first of January 2014, when the periodic payment entitlement exemption was eliminated from the wage tax regime.

As the rule involving only 80% being taxed in a fully-fledged commutation scenario will cease to apply at year-end 2014, you may be doing yourself a favour if you decide to use this favourable periodic payment withdrawal scheme before the year is out. No revisionary interest will moreover be due and payable in connection with lump-sum withdrawals.

! It may be worthwhile for you to file an averaging petition with the Tax and Customs Administration when you are having to make steep severance payments. We would note, however, that this is conditional upon the definitive tax assessments for all three (consecutive) averaging years having duly been finalised by the tax authorities.

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