Netherlands: “Crisis levy” on salaries, upheld - KPMG Global
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Netherlands: “Crisis levy” on salaries, retroactive application upheld

Netherlands: “Crisis levy” on salaries, upheld

The European Court of Human Rights (ECHR) on 7 December 2017 issued a judgment in a case concerning the Dutch “crisis levy” imposed in 2013 and 2014 in response to the economic crisis. The ECHR dismissed the objections against the crisis levy, and upheld the crisis levy imposed on certain salaries.


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The crisis levy was part of a package of measures introduced to deal with the economic crisis. Salaries exceeding €150,000 were subject to a high salary “pseudo final levy” of 16% in 2012 and 2013. A vast number of objections were filed against the crisis levy, resulting in several test cases and a number of legal proceedings. An important argument put forward in the test cases concerned the retroactive effect of the crisis levy. In test cases, the Dutch Supreme Court in January 2016 upheld the crisis levy. Three taxpayers subsequently initiated proceedings before the ECHR.

The taxpayers complained, in particular, about the retroactive effect of the crisis levy. According to them, the retroactive effect breached Article 1 of Protocol No. 1 to the European Convention on Human Rights because the crisis levy could not have been foreseen. They also argued that no account had been taken of the financial difficulties arising from the levy—in particular that it would disproportionately affect a small group of employers. The appellants considered this disadvantage to be disproportionate given the modest revenue generated by the levy.

Retroactive effect upheld

The ECHR dismissed the objections against the crisis levy and concluded that the crisis levy was not contrary to Article 1 of Protocol No. 1 to the European Convention on Human Rights. The ECHR noted that the retroactive effect of the crisis levy was lawful in this case because the Netherlands had specific and compelling reasons to introduce it. The Netherlands felt that during an economic and financial crisis it was compelled to comply with its EU budgetary commitments. According to the ECHR, this meant that the interests of the Dutch state carried more weight than the interests of the affected employers. The ECHR also dismissed the complaint that insufficient account was taken of the impact of the levy on individual employers. According to the ECHR, the crisis levy was less severe than the Greek measures and these had also been allowed. Lastly, the ECHR did not accept the argument that the levy applied to a disproportionately small group of taxpayers and it held that the levy was in proportion to revenue.

The ECHR, thus, confirmed that the crisis levy was lawful in a judgment consistent with the prior findings of the Dutch Supreme Court. 


Read a December 2017 report prepared by the KPMG member firm in the Netherlands

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