North Netherlands District Court ruled that the costs of a party and ski trip organised by the employer were rightly taxed as wages by the Inland Revenue.
Employer branding
The employer believes that it is not a question of wages, but of marketing and recruitment costs. Employers need to show that they are attractive due to the changing society and tight labour market. And in the current times, this has to be in the form of marketing or “employer branding”. The anniversary party and the ski trip are forms of such employer branding.
In addition, the employer claims that the party and trip contribute to the integration and mental well-being of the employees.
The employer acknowledges that the anniversary party and ski trip benefit its employees, but that is also the intention. After all, the purpose of the activities is to make working for employer more attractive. It is established that only employees of employer (and affiliated companies) could participate in the activities.
Pay
However, the employer's understandable argument runs aground on the wage concept formulated in section 10(1) of the 1964 Payroll Tax Act. This provision reads as follows: “Wages are all that is enjoyed from an employment or former employment, including what is remunerated or provided in the context of the employment.”.
The Court is of the opinion that this wage concept, deliberately formulated very broadly by the legislator, gives it no room to take into account the social developments cited by the employer. If so, the Court would sit too much in the legislator's chair.
The Court therefore ruled that the Tax Office was right to levy 80% payroll tax (final levy under the working expenses scheme) on the costs incurred by the employer for the anniversary party and ski trip.
It is not known whether the court's ruling has been appealed.