Netherlands: Revised government position concerning taxation of severance payments, cross-border workers

Severance payment is to be sourced over the period of employment on which the severance is based

Revised government position

The Dutch Ministry of Finance issued new guidance regarding the allocation of the taxation of severance payments of cross-border workers.

With the new position, a severance payment is to be sourced over the period of employment on which the severance is based. In most situations, this will be the entire period of employment (instead of the last 12 months of employment), with a time-spent apportionment method then to be applied—that is, Dutch period employment / total period of employment.

The new guidance will be applicable to severance payments made after 4 February 2022 (the date of publication). Taxpayers may request the Dutch tax authorities to apply this new guidance on all assessments that were not final as of 5 February 2022, but taxpayers will need to provide proof that this treatment would not result in a (partial) non-taxation of the severance payment.  

Previously, the position of the Dutch tax authorities regarding the allocation of severance payments for cross-border workers resulted in double taxation because of the way the severance payment was sourced.

Read a February 2022 report prepared by the KPMG member firm in the Netherlands 


The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.