Court of Appeal of The Hague ruled that KLM pilots should have known that their wages were subject to income tax somewhere.
Duty of care
On 23 November 2023 blogged We are referring to a judgment in which the Supreme Court ruled that, in principle, an employee is personally responsible for fulfilling his or her tax obligations. However, in exceptional circumstances, the employer may be obliged to inform the employee of relevant changes to tax legislation (on the basis of the employer’s duty of care). This is particularly the case where the information is also relevant to the employer’s withholding of payroll taxes.
New tax treaty
The case concerns two Swiss pilots employed by KLM whose salaries are now partially taxed in the Netherlands following the entry into force of the new tax treaty between the Netherlands and Switzerland. KLM failed to inform the pilots of this. They are therefore claiming compensation from their employer.
Information provided to the Court by the pilots regarding their income taxed in Switzerland shows that the income taxable in the Netherlands under the tax treaty has not been taxed in Switzerland. The Court then considers that the pilots must have been aware of this. It is also common knowledge that income must be taxed somewhere (either in Switzerland or in the Netherlands). Therefore, the pilots cannot claim that KLM acted contrary to the principles of good employment practice by failing to draw their attention to the (consequences of the) amendment to the tax treaty. The Court revoked the compensation previously awarded to the pilots and ordered them to reimburse their employer for the legal costs incurred.