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A company has enquired whether it must adjust the 2% withholding tax rate when a contract, initially for less than a year, is extended or suspended due to ERTE (temporary employment regulation schemes) and subsequently exceeds that period. The DGT has ruled that an extension necessitates the regularisation of the withholding tax rate.
Companies must ensure that withholding tax rates are updated and regularised when contract durations change due to extensions or suspensions, to avoid incorrect tax applications.
The tax team reviews your specific situation.
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