On November 17, 2015 the Advocate General to the Supreme Court, Mr. P.J. Wattel, issued his Opinion in a test case concerning the crisis levy for 2014. Meijburg & Co is litigating this test case. The Advocate General concluded that there is retroactive effect and furthermore that this cannot be justified. According to the Advocate General, the crisis levy violates the right to property that is protected under Article 1 of Protocol No. 1 to the European Convention of Human Rights (ECHR).

Crisis levy

In both 2013 and 2014 a one-off employer’s levy of 16% was levied on salaries that in preceding years, i.e. 2012 and 2013, exceeded EUR 150,000. Many employers filed objections against the crisis levy, a number of which are now being litigated as test cases, although individual cases are also pending.

Proceedings concerning 2013 and 2014

In the test case proceedings conducted by Meijburg & Co with regard to 2014, the Advocate General concluded on November 17, 2015 that the crisis levy for 2014 (and also for 2013) had retroactive effect and that the government had failed to justify this. He argues that the crisis levy for 2014 in fact defies two legitimate taxpayer expectations. Firstly, the expectation that the government would adhere to its announcement that the crisis levy would only be levied in 2013 and, secondly, the expectation that past time periods would not be taxed again.

The Advocate General concluded that the scope of the crisis levy therefore should not go further back than September 17, 2013, as it was only then, on Budget Day 2013, that the one-off extension of the crisis levy was adequately announced. The crisis levy cannot therefore apply to salaries before September 17, 2013, to the extent that these exceeded EUR 150,000. The Advocate General makes no distinction between regular and irregular salaries.

In proceedings against the crisis levy for 2013, Advocate General Wattel concluded on June 18, 2015 that retroactive effect is also present for 2013 and that this cannot be justified for a number of reasons. The scope of the crisis levy for 2013 therefore should not to go further back than May 25, 2012, the date on which, in the opinion of the Advocate General, the crisis levy was adequately announced.

The following example serves to illustrate this.

An employee received a salary of EUR 325,000 in 2013. The crisis levy remitted on this salary was EUR 28,000 (EUR 325,000 - EUR 150,000 = EUR 175,000 x 16%).

Until September 17, 2013 his salary was EUR 225,000 and after September 17, 2013 it was EUR 100,000. If the Supreme Court follows the Advocate General, then the crisis levy payable would be calculated on the EUR 100,000 received after September 17, 2013. The crisis levy payable would then be EUR 16,000. According to the Advocate General, no crisis levy is payable on the salary until September 17, 2013 due to the retroactive effect. That salary does however contribute toward the threshold of EUR 150,000.

Conclusion

We now have to await the judgment of the Supreme Court. If the Supreme Court follows the Advocate General’s Opinion, that may, in some cases, lead to a refund of part of the crisis levy for those employers who filed a notice of objection against the crisis levy.

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