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    New rules for an Early Retirement Scheme

    As of 2021, the final levy imposed as a penalty on payments part of an Early Retirement Scheme will be temporarily relaxed. The final levy, called ‘RVU-eindheffing’ or ‘pseudo-eindheffing’ in Dutch, is equal to 52% of the amount paid. In principle, this levy will continue to be imposed, but an exemption will go into effect for senior employees. According to the government, this group of people was taken by surprise by the increase in ‘AOW-leeftijd’ (the age at which a person is eligible to a state pension).

    The ‘pensioenakkoord’ (Agreement on Pensions), concluded in 2019, includes various agreements on different topics pertaining to pensions. One of those topics is the increase in the age at which someone is eligible for a state pension. Closely related topics are sustainable employability and early retirement. New rules for this should go into effect on January 1, 2021.


    The rules are included in the legislative proposal ‘Bedrag ineens, RVU en verlofsparen’ as well as the corresponding temporary subsidy scheme ‘Tijdelijke subsidieregeling duurzame inzetbaarheid en eerder uittreden (Temporary Subsidy Scheme for Sustainable Employability and Early Retirement). The legislative proposal has recently been passed by the lower house of government. The plan is to have the upper house discuss and vote on the proposal this year as well.
    If you agree with a senior, dismissed employee on a financial compensation, for example through a severance package, so that (s)he does not have to look for a new job for only a few years, there is the risk the revenue service will regard this financial compensation as an Early Retirement Scheme: a scheme in which the employee receives periodic payments until reaching the age at which (s)he is eligible for a state pension or old age pension. A final levy of 52% must be paid as a penalty over any payments deemed part of an Early Retirement Scheme. This rule is supposed to prevent people from going into an early retirement.


    However, it is not always possible to continue working until reaching the (increasing) age at which you are eligible for a state pension. Therefore, it has been decided that the payment of a financial compensation which can be labelled as an Early Retirement Scheme is exempt from the final levy of 52% as penalty if the compensation is below a set threshold amount. The plan is to determine this set amount each year by calculating the gross amount of the net state pension. In 2020, this would be € 1,767 per month. The set threshold amount is not related to a person’s wages or length of employment. The rule does not apply to every employee. One condition applying to the exemption is that the employee going into early retirement must reach the retirement age within three years, at the latest in 2025. In a collective labor agreement (CLA), the parties involved can elaborate to which occupations the exemption applies. It is only a temporary measure: the exemption to the final levy is in effect from 2021 through 2025, with a possible extension up to and including 2028.


    An example: Aurora will reach the age at which she is eligible for a state pension on December 1, 2023. From July 1, 2023, she will receive a monthly payment part of an Early Retirement Scheme of € 2,500 per month, with the last payment scheduled for November 1, 2023. The period between receiving the first payment and reaching the age at which she is eligible for a state pension is 5 months. The exemption to the final levy will then equal € 8,835 (five times the aforementioned set monthly amount of € 1,767). For every payment, it will be checked whether or not the threshold amount is exceeded. For the first three payments, in total € 7,500, the threshold amount of € 8,835 is not exceeded. However, the payment made on October 1 will exceed the threshold amount by € 1,165 (4 x € 2,500 minus the threshold amount of € 8,835). This means that for the € 1,165 excess, the employer will pay a 52% final levy as a penalty. The same applies to the fifth payment made on November 1, as the threshold amount was already exceeded in October. The employer will declare this final levy in the column ‘pseudo-eindheffing RVU’ when filing the payroll tax return.


    Soon, 100 weeks of accrued paid leave

    Not only the final levy will be relaxed. The scheme for accrued paid leave, called ‘verlofsparen’ in Dutch, will also be extended. In a collective labor agreement or individual contract, it can be agreed that an employee accrues paid holiday or compensational leave for e.g. working overtime, doing arduous labor or working in shifts, without being obliged to take this leave in the short term. By law, any accrued paid leave does not be declared as wages, as long as the total accrued leave by the end of a calendar year does not exceed a total of 50 weeks. As of 2021, this total will be increased to 100 weeks: almost two years.

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