According to the Dutch Supreme Court the right to levy tax on international termination payments had to be allocated, in short, in accordance with the employment history over the period of 4 years preceding the termination date.
Recently the Dutch State Secretary of Finance has decided that for the allocation the last 12 months of work preceding the termination date is decisive instead of 4 years. This is in line with modified OECD commentary.
Further it is no longer relevant whether the costs relating to the termination payment have been recharged within the group.
These changed points of view are effective with regard to termination payments made as of July 15, 2014.
Depending on the nature of the termination payment an allocation other than based on the preceding 12 months could be justifiable.
