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Are you liable for Dutch tax if you are carrying out a project in the Netherlands with your own employees? The main rule is that you pay tax in the country where you work. However, temporary stationing or project-based work can be subject to other rules.
Suppose that you would like to have one or more non-Dutch employees in your company to work in a Dutch subsidiary on a temporary basis. Or you want to station a trade representative or agent in the Netherlands. In such cases, the answer to the following question is important:
If the wage costs are charged individually to the subsidiary and the employee is supervised / steered by a manager or supervisor within the Dutch subsidiary, your employee will be liable for Dutch tax. In such a case, the Dutch subsidiary will indirectly have to pay the salary and all labour law conditions pursuant to Dutch law (including minimum wage, holiday allowance, holiday time and days of leave and/or pension rights).
If the employee does not work at the account and benefit of a Dutch company, the duration of the employee’s stationing in the Netherlands or the duration of the project becomes the key consideration.
If the employee resides in the Netherlands for a period of less than 183 days during a 12-month period or a calendar year, he/she is not liable for any Dutch tax. The employee will not have be included in the Dutch payroll. However, in such cases, an A1 statement is required in order to be also exempted from contributions to the Dutch social security system. This is a legal declaration of secondment for the social security services. Bol International’s consultants are happy to organise this for you.
If the emplouee stays in the Netherlands for 183 days or more, he/she must pay Dutch tax on the income relating to the physical work in the Netherlands. This does not necessarily mean 183 consecutive days. Days during which the employee does not work, but is present in the Neterhlands must also be includes when assessing the 183 days rule, including weekends, sick days, public holidays etc. In such a case, you must pay withhold Dutch wage tax from the first day your employee is working in the Netherlands and you must comply with Dutch labour law.
However, if a project takes 12 months or longer, the duration of the employee's stationing is not relevant anymore. In that case your employee will be liable for wage tax in the Netherlands from day one, and you must comply with Dutch labour law.
The labour situation, however, is often more complex than described above. Employees change countries and may work in the Netherlands with interruptions. This is why each project requires an individual approach in terms of labour law, tax and social insurance. The Bol International consultants have elaborate knowledge and experience in all aspects and are happy to advise and assist you.
The Dutch Tax Authorities verifies the length of that period by checking contracting agreements, the payroll, A1 statements of the Social Insurance Bank and random spot checks. The Tax Authorities may also check and audit the entire contractor chain.