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Non resident employer

In the event you have taken up employment with a company that is actually situated outside the Netherlands, then this can have severe consequences if not done correctly. How is it done and how simple can it be?

Working from home or on the road from home for a non resident employer implies that you are subject to wage tax and social premiums in the Netherlands. The tax treaties determine that employment income is taxed in the country where you are working.

It does happen that the foreign employer processes your payroll through the foreign payroll with the foreign tax and foreign social premiums. This is not correct, but most likely a result of the employer not being familiar with Dutch tax regulations and possibilities. The result is that you not only have no tax treaty protection, that implies not double taxation relief, you are also not contributing to the obligatory social system via premiums.

Most foreign employers find it complex or difficult to register themselves abroad, but that is what we call cold water fear. The registration is not complex, the employer is compliant and the employee can benefit from the Dutch. The employer receives a journal from the Dutch payroll provider for its bookkeeping, that implies the costs of the Dutch employer are well processed in the foreign bookkeeping.

The benefits from the Dutch system are most of the time the trigger for the employee that the payroll taxed abroad is incorrect. The employee can only benefit from the Dutch mortgage deduction if Dutch taxable income is earned. The same is with the social system to which needs to be contributed. If not, the penalty from the social institute for not contributing is substantial. If you pay foreign tax while working and living in the Netherlands, please contact us.

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