Severance and termination tax in the Netherlands

What you're entitled to

The default Dutch severance is the transitievergoeding, which applies whenever an employer ends an employment relationship without serious cause (ernstig verwijtbaar handelen) attributable to you. It's one-third of a month's salary per year of service, calculated on your gross monthly pay (including the average of structural variable pay, holiday allowance, and 13th-month allowance).

Above that statutory floor, both sides usually negotiate. A vaststellingsovereenkomst (settlement agreement) is the standard exit document; once signed, it ends employment without dispute and protects your right to WW unemployment benefit. Most senior departures end with a vaststelling at a multiple of the transitievergoeding, often called a golden handshake.

How the payout is taxed

Severance is Box 1 wage income. The full amount is added to your taxable income for the year of payment, taxed at the progressive Box 1 rates: 35.75% / 37.56% / 49.5%. The whole payout typically lands in your top bracket because it's on top of your already-earned year-to-date salary.

Your employer applies the bijzonder tarief for withholding: a flat percentage based on your prior-year income. For high earners this comes out around 49.5%. The withheld amount usually overshoots the eventual liability slightly (because the bijzonder tarief band lags your actual margin), and the difference is refunded when you file your annual return. See the payslip guide for how this looks on the loonstrook.

The timing trick

The single most valuable negotiation lever after the gross amount is when the payout lands. Pushing the payment from December into January of the next calendar year shifts the entire amount into a year where:

• You may have lower base income (between jobs, sabbatical, part-time, or self-employed) so less of the severance hits the 49.5% top bracket.
• Your next-year tax credits (algemene heffingskorting and arbeidskorting) phase out from a different starting point.
• The bijzonder tarief is recalibrated annually, often more favourably for someone with lower expected income.

The arithmetic is unique to your situation. As a rough heuristic, on a €120,000 severance, deferring from December to January when you go from full-time work to a six-month gap can save €15,000 to €25,000 of net tax. The employer needs to agree to the deferred payout date and document it in the vaststellingsovereenkomst.

WW unemployment benefit

If you're a Dutch resident with sufficient work history (26 weeks worked in the prior 36 weeks for the basic right; additional months for extended duration), you can claim WW from the UWV after termination. WW is roughly 75% of your prior salary in months 1 to 2 and 70% from month 3, capped at a daily maximum that yields about €4,500 to €5,000 per month at the cap.

The duration is 3 to 24 months depending on work history (a month per year of work above five years). WW income is itself Box 1 taxable. WW doesn't reduce your severance, and severance doesn't reduce WW; both are taxed separately as wage income.

Apply within a week or two of termination at uwv.nl with your DigiD. WW is paid monthly, in arrears, and is sensitive to the exact wording of your termination document; a poorly worded vaststelling is the most common reason for WW refusal.

If you're also leaving the country

If termination coincides with emigration, the timing of the payout matters more, not less. A payout while you're still BRP-registered is fully Dutch-taxed; a payout after de-registration is allocated based on the period of employment that earned it. The treaty between NL and your destination country usually places the tax with NL on severance from a Dutch employer, but specific treaties differ. Get cross-border tax advice before agreeing the payout date.

See the leaving the Netherlands guide for the broader exit checklist that severance fits inside.