An employee who is dismissed is often entitled to a transition allowance. That compensation is taxed as income from work and home (Box 1). That has Court of Appeal of The Hague recently confirmed.
Disproportionate burden?
The case concerns a lady who was dismissed by her employer. In connection with this dismissal, the (ex-)employer paid her a transition allowance of gross €41,500, on which €20,389 in wage tax was withheld. The inspector then (of course) also included the transition allowance in the taxable income from work and home (box 1), offsetting the withheld wage tax. Ms files an objection and appeal against the income tax assessment imposed for this purpose.
Her contention is that the transitional allowance is disproportionately burdensome and this is not in line with the purpose of the transitional allowance. This is because the compensation is meant to provide for her living expenses during the period between her dismissal and when she receives AOW.
The court ruled that the transition allowance was rightly subject to wage and income tax. The compensation qualifies as wages from previous employment. The tax court must rule on the basis of the law and may not test the inner value or fairness of that law, except for the situation where the statutory provision would be contrary to treaty provisions binding on everyone. Ms did not invoke the latter.
Finally, referring to the benefits affair, the restoration of rights regarding box 3 and the issues surrounding gas extraction in Groningen, the lady appeals to the principle of equality. But she does not substantiate this appeal in more detail, preventing the court from addressing it.