A settlement agreement (VSO) constitutes a formal agreement between employer and employee to terminate the employment relationship by mutual consent. This agreement typically includes arrangements regarding the transit compensation, the payout of accrued vacation days, the Individual Choice Budget (IKB), and any reimbursements for legal assistance. These amounts are always stated gross. This means that the employer withholds payroll tax before the net amount is paid out. For more details on what a VSO exactly entails, consult our comprehensive section: vaststellingsovereenkomst check.

When the employment has ended (after the notice period), the final settlement follows. Then all gross amounts are reduced by payroll tax, which includes income tax and social insurance premiums. It is important that this tax is a provisional withholding. The final tax calculation takes place in the income tax return for the entire year.

At Wolderwijd Juristen, we are also available for legal advice after signing the VSO, for example, with questions about the final settlement or fiscal consequences. So after the vaststellingsovereenkomst check, we do not leave you hanging. Unfortunately, this still happens with competitors sometimes. They then respond that they only check the vaststellingsovereenkomst and do not (may) advise anymore afterward. With us, this aftercare is simply part of the service.

How does payroll tax work on VSO components?

For a severance payment or transit compensation, IKB, vacation pay and/or vacation hours, the employer applies the table for special remunerations. For 2025, the following standard rates apply in box 1 (work and residence), based on the estimated annual income:

• Bracket 1 (up to €38,441): 35.82%
• Bracket 2 (€38,441 to €76,817): 37.48%
• Bracket 3 (above €76,817): 49.50%

In addition, a settlement percentage for payroll tax credit is applied, which can be positive or negative depending on the annual salary. This percentage corrects for tax credits such as the general tax credit and labor credit and can increase the effective rate to above 49.50%. This may be the case in higher income brackets (for example +6.51% at annual salary around €76,818). For the average employer, this ensures a conservative withholding to prevent underpayment (and thus additional assessment). After all, it is a provisional withholding.

The severance payment or transit compensation and payout of vacation hours are fully taxable as income. The IKB is taxable if paid out as salary (but can be exempt if used for specific purposes). The legal costs (e.g., €1,000) often fall under the Work Costs Scheme and are tax-free provided within the free space. Therefore, always check the employer's specification for the exact withholdings and consult a tax advisor if your personal situation requires it.

Other VSO elements such as exemption from work, last working day, social media, outplacement, and testimonial can also have fiscal implications. Also view non-compete clause, relationship clause, and references for a complete picture.

Practical example: A client question about the final settlement

As an example of our ongoing service, we recently received a question from a satisfied client whose file was closed:

"My file is closed, but I have now received the final settlement. €11,000 has been paid out. Below is an overview of my expectations. Is so much payroll tax deducted or is something wrong? Could you still give me an answer on this?"

The client expected: Transit compensation €10,500 gross, IKB €4,600, Jurist €1,000, Vacation hours €7,200. Excluding the tax-free jurist costs, the gross total comes to €22,300. With a net payout of €11,000, this implies a withholding of €11,300, or approximately 50.67%.

My response was:

Dear (anonymous),

Thank you for the email. Of course, I am happy to take a look with you!

The invoice for the jurist costs should be declared to the employer. Have you done this yet? It depends a bit on how the employer has arranged this, but often there are declaration forms.

If you leave the jurist costs out of consideration, the gross amount comes to €22,000.30. With the paid net of €10,856.76, the withheld tax is €11,143.54, which amounts to just over 50%. This can certainly be correct due to the settlement percentage for payroll tax credits.

Based on the Dutch payroll tax rules for 2025, components such as the transit compensation, IKB, and payout of vacation hours are treated as special remunerations. The standard rates depend on the estimated annual income (excluding the special remuneration). For 2025, it is:

• • Up to €38,441: 35.82%.
  • €38,442 to €76,817: 37.48%.
  • Above €76,817: 49.50%.

At a standard rate of 49.50%, the withheld tax would amount to €10,890.15, resulting in a net of €11,110.15. This deviates €253.39 from the paid amount.

Many employers apply the highest rate for safety. Know that it is a provisional withholding. The final calculation comes in your tax return (May 2026). If the highest rate was applied incorrectly, you will get money back in May.

Know that I am available (and remain) for questions and/or comments.

Kind regards,

J.A. (Jeroen) Kaspers

This percentage is correct due to the application of the special remuneration table with a standard rate of 49.50% plus a positive settlement percentage (e.g., +6.51% at higher annual salary). It is a provisional withholding, and in the 2025 income tax return, this can be corrected.

So know that with us, you are properly assisted with a vaststellingsovereenkomst check. We find vaststellingsovereenkomst checking fun and challenging work and are happy to advocate for your case. So have you received a settlement agreement? Call or email me. I am more than happy to assist you.