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A local council enquired whether its employees could request a 37% withholding rate on overtime payments from the previous year, rather than the 15% rate applicable to arrears. The Directorate-General for Taxes (DGT) ruled that requesting higher rates in this specific case is not permitted.
This ruling clarifies that when paying backdated overtime, the specific withholding rate for arrears must be applied, preventing employees from opting for higher rates typically used for current income.
The tax team reviews your specific situation.
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