Previous company mis-calculated my taxes, Tax office now demands I pay

Question

I was working in a company and moved to another company last March 2017. I already had a 30% ruling from my previous company. When HR in my new company tried to applied again for 30% ruling, Taxes office send a letter that my old company calculated my 30% ruling wrongly (they gave me extra money) and now there are pending money must be paid to taxes office. I've contacted my company and still waiting their feedback.

• Did anyone face this problem before and what did you do?
• Who should be responsible for this, company should pay as it is her mistake or i should pay (it is not small amount of money)?

Answer 1

TL;DR: You'll probably need to pay, but see a lawyer if it's a lot of money.

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Did anyone face this problem before and what did you do?

Not this specific problem and not in the Netherlands, but I do have a bit of Israeli experience, both w.r.t. my own taxes and my limited legal background, on both of which I'll base my answer.

Who should be responsible for this, company should pay as it is her mistake or i should pay (it is not small amount of money)?

You're mixing up several questions:

1. To what extent (if at all) is the state due the miscalculated taxes?
2. (I'm adding this one:) How should the missing taxes be paid?
3. Who should pay whom?

Is the (Dutch) state owed the tax miscalculation difference?

Generally, the answer is Yes, as @anomuse' answer suggests. However, this may potentially be restricted by:

• A statute of limitation - In some states in the world, the tax authorities cannot demand unpaid taxes more than X years back, unless you committed some sort of fraud. I'm not sure whether that's the case in the Netherlands.
• An amount/fraction of your salary limit - In some states in the world, if a person made a good faith assumption that certain monies were due to him/her by the state, and it is discovered they aren't, s/he might argue to having "relied" on this money being available to him, and this can have legal implications regarding the amount owed.

In your case I suspect none of these two would be relevant, but if we're talking about sufficiently large amounts, and if you did actually "rely" on them (e.g. you took out a mortgage or other such personal circumstances), a lawyer would tell you if that's an argument you can use.

How should the missing taxes be paid?

There are essentially 3 options here:

1. You pay them everything in one go.
2. You pay them in arrears over a prolonged period.
3. They deduct what you owe them from what they owe you.

Option 3 is usually irrelevant. Between option 1 and option 2, or within the details of option 2, there should be some room for negotiations and perhaps legally-mandated leeway for the tax authorities. Also, the "reliance" argument I mentioned above sometimes does not reduce them sum owed, but allows for slower repayment of the debt.

If you are able to speak Dutch, consider discussing this with the tax authority directly. Otherwise, either try to get your HR to help you - if they're super friendly and willing to spend the time - or, again, see a lawyer.

Who should pay whom?

You are liable vis-a-vis the Dutch state.

However, you should make sure the company did not somehow benefit in your case by avoiding some payments it should have made itself. For example, AFAIK the company does not make retirement fund contributions for the untaxed 30% (and neither do you). If that happened, they should also be paying you - directly or by depositing more towards your retirement benefits.

Note that they might owe you that money with some interest. Also, if you believe you have incurred losses due to the "reliance" situation I mentioned before, or if you are required by the tax authorities to pay a large amount of back-taxes at once, you may theoretically have ground to make compensation demands of the previous company or sue them for such compensation. I stress the may here, since this is just speculation. Again, if we're talking about large amounts of money - consult a lawyer about this. If not, just make sure you didn't get stiffed on your retirement benefits.

Answer 2

If the tax office is correct, I'm afraid that you will probably have to pay the money. In the end, you are liable for your taxes, not your employer. The only exception would be if you had a contract specifying a net salary - then your employer would be liable to make up your net salary to the contracted amount after the correct taxes have been paid.

You should check whether your previous employer agrees with the judgement of the tax office - they are known to make mistakes. If it's a lot of money, you could also consult a tax expert.

Answer 3

You had income, and there are laws that determine how much income tax you should pay for that income. And that's how much money the tax office wants to receive; what your company calculated is quite irrelevant.

As long as the money that your company deducted from your pay, and the money they sent to the tax office are the same, you will be responsible for all the taxes. Let's say we both should have paid €1,000 but your company incorrectly calculated that you should pay only €500. The result is that there was €500 more in your pocket than you should have had, and €500 more in your pocket than in mine, and €500 less in your account at the tax office, so all you have to do is hand over the money that you should have never had in the first place.

(The way this works in the UK: Every month, your employer calculates your total income for the year, how much tax you should have to pay, how much tax you paid so far, and then they pay the difference to the tax office, limited to 50% of your income. So if your previous employer got the numbers wrong, the next employer fixes it automatically. If your previous employer withheld €500 less than they should, the next employer automatically pays €500 more of your money to the tax office. If your previous employer withheld €500 more than they should, the next employer automatically pays €500 less to the tax office and €500 more to you. More common than errors are situations where your salary changed (for example unemployment, or a big bonus).