Advice for people working in The Netherlands

WORKERS being supplied in the Netherlands are being targeted in a new initiative by the Dutch Tax Authorities.

Belastingdienst - the Dutch Tax Authority -  recently issued a booklet called “Cross border tax and social security issues” and is designed to provide information for non-Dutch employers supplying workers in the Netherlands.  The following is a brief overview of the main technical issues.

Taxation

Amongst other arrangements, international tax treaties state which country may tax the remuneration for work performed in an employment relationship.  This is generally the country in which the work is carried out.

However, there is an exemption to this rule that causes confusion and leads many unwary employers and employees in to the realms of “Tax Evasion”.  The confusion arises when an individual is in the country in which they work for less than 183 days and the definition of Employer.

The conclusion is that if you are working in the Netherlands for less than 183 days on behalf of a client based in the Netherlands, who effectively is paying for your services, then you are still liable to taxation in the Netherlands from the moment of arrival.

Withholding Agents

A non-Dutch Employer or staffing agency based outside of the Netherlands, even if not considered the Employer for Tax Purposes, is still responsible as a withholding agent for Dutch Payroll Tax and as such must withhold and remit the payroll tax payable by the employee.

Social Security

The principal rule states that an individual is liable to Social Security in the country in which they work.  There is no equivalent of the 183 day test.

There is an exception to this rule and that is that the employee has remained insured in their country of residence. An A1 (E101) certificate of continuing liability to insurance (National Insurance) must be obtained from the UK Competent Authority (HMRC).

If a valid A1 or E101 is held then no Dutch Social Security is due.

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