Wages/compensation from third parties

Wages that have not been paid by the employer may still have to be processed by that employer in the payroll administration.

When employees receive benefits or benefits, it is not always immediately clear whether this should be regarded as a “fiscal” salary. This distinction is crucial because it determines whether an employer is liable to withhold payroll taxes.

At first glance, the rule seems simple: pay is the consideration for work. In practice, however, things are often more complicated — especially when benefits are not provided directly by the employer, but by a third party. Then the question arises: when is there a salary, and who is responsible for withholding tax?

When is there a salary?

To determine whether there is a salary (and not, for example, a donation), there must be a causal relationship between the employee's benefit and employment. This is clear in article 10 of the 1964 Payroll Tax Act.

This has been elaborated in case law in the theory of reasonable imputation:

‍“There is a salary when the benefit received can be attributed to employment in business, taking into account social views. Benefits that are part of the employee's privacy are excluded. '

Examples include:

• Employer salary, such as regular salary.
• Third-party wages, for example sales bonuses, are provided by manufacturers to sellers.
• Tips, such as being enjoyed in the hospitality industry

Tax qualification of tips

The tips in the hospitality industry are a special form of remuneration, as also emphasized in the recent knowledge group position Withholding obligation for tips¹.

At first glance, tips might be seen as third party salary, because there is a remuneration that is given to the employee as part of their employment as a hospitality employee. In practice, however, this is different.

Indeed, based on article 3.6 of the 2011 Payroll Tax Implementation Regulations, there is no salary, provided that these tips are not included in the employee's standard salary.

It is important here, however, that the tip jar in its entirety goes to the employees. The employer is therefore not allowed to use part of the tip for personal or business gain. If he does this, there is a salary from the employer.

Interaction between employer pay and third party salary

Although employer wages and third-party wages seem to be different sources, there may still be a withholding obligation for the (formal) employer, even if the payment actually comes from a third party.

The Supreme Court, in a case concerning² , has considered that this may be the case if the reward is provided by a third party:

• At the expense of the employer,
• On behalf of the employer, or
• With the knowledge of the employer.

In such cases, the salary of third parties is tax treated as an employer's salary. In the event that there is a group relationship, this qualification even goes so far as to examine whether the employer could reasonably have known that the benefit was provided.

Consequences for the employer's withholding obligation

As a result, an employer may unexpectedly be confronted with a withholding obligation for a benefit paid by a third party. This can lead to liquidity problems in the event that the benefit exceeds the employee's normal salary and therefore too little payroll tax can be withheld to meet the employer's withholding obligation.

Although the employer can formally recover the withheld tax from the employee, this can put pressure on the employment relationship. It is more practical to make agreements with the third party in advance — for example, that the third party provides the benefit net, while the employer takes care of the tax settlement.

Prevent tax surprises

As an employer or third party, do you want clarity about the tax consequences of third party wages? Then make an appointment via the link below. Together, we will look at your situation and ensure that you are not faced with unexpected burdens.

¹ KG: 204:2025:7 withholding obligation for tips

² HR March 23, 2007, ECLI:NL:HR:2007:AU9527, BNB 2007/168