Housing provided by employer

Housing provided by employer implies that old times have returned on us. In the past the blue colour worker could not afford housing themselves, now it is the white colour worker.

Housing provided by employer

Everything an employee receives from the employer is taxed income. There are some exceptions to this rule. Paying for the costs of housing is not one of them.

In 1989 an employee purchased his own home. The employer reimbursed the employee with EUR 100 per month for reimbursement of extra mortgage interest costs. The necessity of this employee moving closer to his work, did not make the EUR 100 reimbursement tax free according to the court.

Maximum rental fee

The moment that the employer makes housing available for the employee, the maximum rent is limited. The maximum rent cannot exceed 18% of the annual income of that employee.

Example

You attract from abroad a EUR 60.000 gross annual salary costing employee. For that employee the company purchases an EUR 400.000 house at 4% mortgage interest loan. We assume the full amount of the purchase could be loaned and that there are no purchase costs. This is for the ease of the example.

The company pays EUR 400.000 times 4% is EUR 16.000 interest per year. We assume EUR 4.000 more additional costs are involved with the housing. Costs like city tax, small maintenance.

The annual costs is EUR 20.000. The maximum rent that can be charged based on the salary is EUR 10.800. This implies it costs the company EUR 9.200 to gain an employee. Is that a problem? With the current housing market (2022) where the house value increase roughly 15% per year, we think it is a good investment. Even if the housing market is neutral, with the current lack of employees, it is still a good investment.

30% ruling and housing

The 30% ruling is the best tax benefit we have in the Netherlands. That is not the same as the employer being able to pay 30% of the salary tax free and provide free housing. In other words, regardless if you have the 30% ruling, for the housing rent is to be paid.

Employer benefit

The benefit for the employer to arrange for the employee housing, either rent or purchase, is multiple. In the current housing market, both rent and purchase, it is very difficult to find suitable housing. Or only less suitable housing is found.

The employer that offers a job with suitable housing is king. King in the sense that this is an attractive offer for employees. Also King with respect to continuity of the employment, if the housing is connected to the employee being employed.

Tax is exciting

We think tax is exciting. This exciting possibility of the employer providing housing with the maximum 18% years’ salary rent, is not being used. We process for a significant number of employers the payroll and only one employer recently inquired about this option. We think this is a great opportunity for the employee. And possibly a good investment for the employer. Whether that is a good investment in the employee or housing market, future will tell.

The process towards filing of the corporate income tax return

The process towards filing of the corporate income tax return

The process towards the filing of the corporate income tax return in the Netherlands you might wonder about. We explain the steps to be taken.

The process towards filing of the corporate income tax return

If you are the shareholder and or director of a BV company, you are the person in charge of the procedure. It all starts with the bookkeeping. The BV company needs to run a bookkeeping like a bubble.

The bubble cannot let escape money to the shareholder, without it being labelled. It is labelled either salary or dividend. When neither is the case, the money flowing to the shareholder in cash or costs is a loan the shareholder needs to pay back.

We are often confronted with new clients who keep an excel bookkeeping for the BV company. Excell is not ideal for a one man company, but really not possible for a BV company. You cannot keep track of the outstanding debts and receivables in excel.

Annual report

The result of the bookkeeping is in the annual report. The annual report is a requirement set by the Dutch law. Some find the annual report obsolete, expensive or irrelevant. It is super relevant.

Above I mention the shareholder and director in one line. Actually it is the director of the BV company responsible and in charge of the tax filings and the bookkeeping. However, the moment the annual report is finished, it is the meeting of the shareholders to approve or dismiss the annual report.

This formality is of great influence of the director. In the shareholders meeting the director is given discharge for his or her actions during that year. This legal phrase implies the director is set free from liability with respect to the day to day activities of that concerning year.

The process towards filing of the corporate income tax return

Publication

The moment the shareholders meeting has agreed upon the annual report, the annual report can be published with the Chamber of Commerce. Again this publication is an obligation set by Dutch law. The annual report is to be published within max 12 months from the end of the financial bookyear.

The penalty for not sending in publication of the annual report with the Chambers of Commerce can be EUR 900 fine. That said, we have not seen many of these fines over the years. The true penalty is in the board of the BV being held responsible in person the moment the BV company goes bankrupt.

Corporate income tax return

The moment the annual report is approved, the corporate income tax return can be filed. This is the moment the heart of a tax advisor starts to pump more vividly. In the corporate income tax return the commercial fiscal differences aspects of the annual report come to light. Or balancing out the fiscal unity of several BV companies is finalized in this tax return. All very exciting.

Tax is exciting

We think tax is exciting. Assisting you with running your BV company from an accounting and tax filing perspective is getting us excited. A simple BV company is already exciting.

That said, some in our office really get excited when the BV company is far from simple and challenging. Within the rules that is. One of them is Hans. Hans is a very experienced international tax advisor that is eager to sort out your international fiscal unity. The questions  you might have about how to set up best your structure. Hans is also experienced enough to inform you up front already what is possible and what is certainly not possible.

Hans

A company is a source of income, not loss

A company is a source of income

A company is a source of income, not loss. If the company is a source of loss the phrase company should be replaced by hobby.

A company is a source of income

It does happen that a new client arrives at our office. This client is proud to state they have a company. A healing company, part time piano teacher, yoga enterprise, homework assistant, doggy doggy walky walky and more creative types of companies.

With the aforementioned examples of companies the previous income tax returns contain cost deductions that exceed what is possible. Part of the home rent costs, electricity, new stairs, house extension. Strangely enough, the tax office never inquired about that.

The explanation for the tax office not to respond was also at hand. The income of the company was far exceeded by all the costs of the company. Actually, if all the costs would have been deleted that are not accepted, the company still had a loss. This was the case for a couple of years already.

Response tax office to company that is in fact a hobby

Upon our findings the new client always responds that this is how they have done it for many years. No issues with the tax office. That is true, but that is not the same as a correct income tax return. The fact that the tax office did not respond had to do with no other source of income.

The moment you have employment income next to this hobby, then the hobby creates a loss. This loss is set off against the positive employment income resulting in a tax refund. Then the Dutch tax office is going to respond quickly.

Most clients with a hobby have no other source of income, it is the partner who funds it basically.

What is the difference between a hobby and a company?

An activity is a company when it participates in the economic traffic. In other words, there are sales and purchases. Commitments. The activity is a company when the aim is to make an income, a profit. And finally, from an objective standpoint a profit is likely to be made.

The moment these three criteria are met, you have a company. And ofcourse nobody expect you to be profitable instantly. That said, if from an objective standpoint no profit is to be expected. Then the activity is labelled as hobby. An hobby is often an activity with costs and pleasure, where the income is often less important than the pleasure.

What to do when you are told your company is a hobby

The moment the conclusion is drawn that your activity is a hobby. The first step is to terminate the registration of the company with the KVK (Chamber of Commerce). That will also stop the request to file an entrepreneurs income tax return.

Explain to the tax office that the VAT numbers should be cancelled.

A company is a source of income
A company is a source of income

Hobby – court case

A nail polish BV company has not made a profit since 2013. Due to a transfer of shares the tax payer claimed a loss in his income tax return. This loss was denied by the Dutch tax office.

The case went to court and in court it was determined that the BV company did take part in the economic traffic. A profit was the goal of the company. But the objective eye quickly came to the conclusion a profit was never going to be possible. Hence the court ruled indeed that the BV company loss was not to be deducted in the income tax return.

The tax payer did proof the turnover was increasing, but the turnover could not keep up with the costs. Also the argument that companies such as Rituals, McDonalds and Amazon were loss making in the startup years did not stand. This argument did not stand as it was not made clear how the situation of those companies reflected on this case.

A BV company can ofcourse not be allocated as a hobby company. That said, the execution of the tax return is done as if it were a hobby. No tax base, no tax deduction.

Tax is exciting

We think tax is exciting. Challenging is to explain to a new client that their activity is in fact not a company, but a hobby. This is never digested well and takes some time for the client to accept.  Plus, the client finds it very strange no longer to report the company tax wise. Despite we are excited about tax, a hobby is a hobby.

Capital gain selling your home – tax free with conditions

Capital gain selling your home – tax free with conditions

These days it is common to make a capital gain selling your home. One of the upsides of the Dutch tax system: no capital gain tax. But there are conditions.

Capital gain selling your home

Selling your home is a fortunate event these days, purchasing a home is a nightmare. Both are very much in balance. The fortunate part: the asking price is being overbid. The nightmare part: you need to overbid the asking price in order to be able to purchase.

At our home we have the best constructor for setting the tiles. He told me he sold his house with the same profit he had to overbid the house he purchased. Basically he has a bigger house for the same monthly costs.

Capital gain selling your home – tax free with conditions

No capital gain tax?

Indeed, in the Netherlands there is no capital gain tax for private individuals. That is also the reason why nearly no company purchases a home. A company selling such a home is subject to capital gain tax. In some countries there is a tax advantage to purchase property in a vehicle, not in the Netherlands.

That said, in this housing market where the employee cannot afford the purchase of the house, the employer helps. We now see employers actually purchasing a property in the name of the company to house the employee. The advantage for the employee is that the rent being charged by the employer cannot exceed 18% of the annual salary. Free tax advising bonus material!

What are the conditions?

The Dutch Government learned from their mistakes. In the past there were no conditions, so you had your house financed for 100%. Actually 120%, as in those days you could finance also the purchase costs.

You sold the house, made a gain, purchased the Porsche with the gain and financed the next house for the full amount again.

Now there are rules. The rule is that you need to invest the gain made in your next house, that is your main residence. The penalty for not doing so, is that you cannot deduct the mortgage interest for the part of the mortgage you took out too much.

Example

You purchased for EUR 350.000 your home 10 years ago, 100% financed. Paid back on this loan EUR 120.000, hence today the loan on the house is EUR 230.000.

The house is sold for EUR 550.000 and you purchased the next house for EUR 650.000. You took out a EUR 650.000 loan for the next house.

The capital gain is EUR 550.000 minus EUR 230.000 remainder loan is EUR 320.000. That implies that for the next house costing EUR 650.000, you can only take out a tax deductible loan of EUR 650.000 minus EUR 320.000 gain is EUR 330.000.

In your tax return EUR 330.000 loan for the house is tax deductible and EUR 320.000 is not.

Fine tuning

The above example is a rough example. Some non-deductible costs influence the capital gain in a lower amount. Plus most people want a new bathroom and kitchen in the next home, these refurbishments are taken from the capital gain amount if no loan was taken out for these costs.

You need a professional mortgage advisor, as you can find with expat mortgages. During the intake they explain you how the possible gain of your current home is taken into account in the finance report of the house you would like to purchase.

It is good or bad, this condition?

It depends who you ask. My experience is that the man is eager to purchase the Porsche while the woman is more relaxed with less mortgage debt. I can related to both the man and the woman. The Porsche as you do not know how long your life will last, not sure if a fast car influences this period. On the other hand, if economics get worse, a low debt is handy.

Tax is exciting

We think tax is exciting. Accurately calculating the capital gain to be invested in the next home is what our team get excited about. This is a service that is part of the tax return filing service.

US tax return requires a Dutch tax return!

US tax return requires a Dutch tax return!

US tax return requires a Dutch tax return, that is the sequence of events if you need to file a US income tax return. We can assist.

US tax return requires a Dutch tax return

A US national or US green card holders needs to file a US tax return. Even if you have never lived in the USA, or only had income outside the USA. The price of being a US national is that you need to file a US income tax return. Even if you live on the moon.

Dutch tax resident and US tax return

The moment you are a Dutch tax resident. Or you have become a Dutch tax resident as you arrived in 2021, or left the Netherlands. In order to be able to file a US tax return, you first need to have filed the Dutch income tax return.

The Dutch income tax return is the base of the US income tax return.

US tax return requires a Dutch tax return!

Only Dutch income – US tax to be paid?

In the situation you only have Dutch income, it is possible that you are to pay US income tax. There are tax credits in the US. If you would like to meet the experts in the Netherlands to assist you filing your US income tax return we recommend you to connect to BNC Tax. BNC tax is a Dutch resident company that is specialized in filing US income tax return.

US tax deadline

The US tax deadline. In general the deadline is April 15 for filing the federal income tax return each year. That date is not carved in stone. The deadline moves to the next business day when April 15 falls on a Saturday, a Sunday, or a legal holiday, and other national events can shift it as well.

How can we help you?

We have the capacity to assist you filing your Dutch income tax return before April 15. That said, we can do miracles, but only so much. You cannot arrive with us a few days before April 15 expecting we can make your deadline.

The Dutch situation is right now (February 17) that all overviews you need are available. Your employer provided your income statement. If not, your last salary spec could do the trick. The bank provided their overviews, please log on and check. Insurance companies issued overviews you might need. No reason not to contact us now already.

The regular income tax return is charged at EUR 390 incl VAT including tax partner.

Tax is exciting

We think tax is exciting. Excited we are already to file your income tax return now!

Box 3 debacle – Dutch asset tax contrary to EU-law – Explained for dummies

Box 3 debacle

Box 3 debacle

As most of you most likely heard, the Dutch box 3 assets tax is currently being debated.  Last year, on 24-12-2021 the High council ruled their decision regarding the Box 3 asset tax. The High council ruled that the Dutch box 3 asset tax is contrary to the EU-law, the right to enjoy your assets. This has never happened before and therefore raises a lot of questions and concerns. What will happen to solve it, how will my assets get taxed, what do I need to do. All questions we fully understand, but not all of them can be answered just yet.

Why is Dutch box 3 asset tax contrary to the EU law?

In order to further understand the issue, it is first important to note the current way of taxing assets in the Netherlands.

Currently, this is done over the value per 01-01-of the relating year, so for 2020, per 01-01-2020. Over the value per 01-01-relating year, the notional income has to be calculated. This is done via the following brackets (2020 rates):  

BracketYour (part of) taxable assets(Savings)
Percentage
0,07%
(Investors)
Percentage
5,28%
1to € 72.79867%33%
2from € 72.798 to € 1.005.57321%79%
3from € 1.005.5730%100%
Box 3 debacle

The result of this bracket is called the notional box 3 income. This income is taxed for 30% (2020 rate).

As you can see, there are 2 percentages in box 3, the lower savings percentage and the higher investors percentage. However, you cannot state how much you save and how much you invest, this is decided by the Tax authority.

This means, that if you for instance have EUR 1.000.000 in savings but EUR 0 in investments, you will be taxed over 33% of EUR 72.798, 79% over EUR 932.775 and over 100% of  EUR 5.573 as an investor. However on savings, you are not expected to have the same gains as an investor, hence it would not be fair if you are taxed as an investor, without the related gains.

This is now deemed unfair.

Box 3 debacle

What will happen now?

Currently, the Dutch government and the Dutch Tax authority are trying to find a solution. A permanent solution is expected to take place in 2025. This means that the years 2017-2024 do not have a solution yet. For these years, the Tax authority expects that a regular tax return is filed, so with assets valued per 01-01- of the relating year. In order to correct the current box 3 asset tax, an objection needs to be filed. This objection is not a regular tax objection, but this is a class action objection. This means that all objections will be considered at once, instead of each separately.

How will I be taxed in the years 2017-2024?

At the moment of writing this article (11-02-2022), this is not known yet. It is expected to receive a final say in May, 2022.

We do already know that the gains will be taxed. It is not sure yet whether realised gains or unrealised gains will be considered.

What happens if I do not object?

This is also not know yet. This is currently being debated by the Dutch government and Tax authority. For now, only if you object, the result of the tax return will be adjusted. In May, 2022, it is also expected to know more details regarding what happens if you do not object!  

A very strange period for us as Tax advisors, but most likely even more confusing for you as an Expat.

We understand that the box 3 asset tax is something that you have questions about. We currently unfortunately, do not know more than above.

Tax is exciting

We think tax is exciting. My name is Kelly and I think tax is exciting.  

If you would like us to investigate whether filing objection would be beneficial for you, feel free to reach out and we will investigate once the final rules are in place!

If you have other questions, feel free to reach out!

Box 3 debacle

How does payroll work in the Netherlands?

Payroll in the Netherlands and labor law

How does payroll work in the Netherlands you might wonder. You are aware we have a solid social system, how does that affect the execution of the payroll?

How does payroll work in the Netherlands?

An employer starting to employ employees in the Netherlands first needs to obtain a Dutch wage tax number. Such a number is never issued automatically, always needs to be applied for with the Dutch tax office.

During this application procedure the Dutch tax office also inquires about the activities of the company. If there are multiple, then the main activity is of interest. Based on the activities a sector code is issued with the Dutch wage tax number. The sector code determines the social premium percentages.

Running the payroll

The payroll provider will ask the employer for the employment contracts. The employment contract is the basis of the Dutch payroll. In the Netherlands it is indeed possible to have verbal employment agreements, however, we think that is not a good base for business. I think the labor lawyer will like you less for that. Only the managing director shareholder is obliged to have a written employment agreement.

In the Netherlands the gross salary is the basis. On top of the gross salary is paid out in May or June the 8% obligatory holiday pay. That is different from the holidays an employee can enjoy.

The gross salary will result in a net salary and that needs to be paid not later than the last day of the month. Normal in the Netherlands is to pay on the 25th of the month. Even with Christmas banks will process this.

Are employers’ costs a fixed percentage?

This is a frequently asked question. No, they are not. Some social premiums are maxed at EUR 59.706 (2022) gross salary. When the salary exceeds this amount, over the excess no more social premiums are calculated.

The tax credits, general and labor, decrease the moment the gross salary increases. Pension contributions have a maximum amount per year over which they are calculated. This maximum amount is different from the social premium amount.

The wage tax rate is 37,07 from zero to EUR 69.398 (2022). From that amount the 49,5% wage tax amount applies.

Payroll in the Netherlands and labor law
Payroll in the Netherlands and labor law

Exercising stock options

Exercising stock options, very popular now, involves the experts. The employer first has to determine during which period in which country the value of the stock options was build up. Then per country the exercising will be taxed.

Employers are once in a while audited by the Dutch tax office. To avoid that not enough wage tax was withheld over the stock option exercising, the employer simply take the maximum percentage, 49,5%. Then in an audit they are not accused of not having withheld enough, with the question to pay up the difference. The employee can claim back too much withheld wage tax in the income tax return.

That said, the moment the employee leaves the Netherlands and exercises its right while being abroad. Dutch tax is to be paid over the exercising of the option.

Mind you, under the 30% ruling only 70% of the value is taxed. The moment the 30% ruling employee leaves the Netherlands, there is no more 30% ruling. Timing could make a difference.

Our payroll team

Running a payroll is not rocket science but neither a walk in the park. The system of the Dutch tax office makes the digital reporting already an obstacle for foreign employers. A crash course running a payroll could take many months, making it no crash course at all.

You need a team that is eager to assist you and we happen to have such a team! Our team ran by Laura is focused on the non-Dutch employer that needs assistance with running a Dutch payroll. A Dutch payroll is not like a Dutch treat, as the employer is paying for the employees tax. That implies the employer has questions. Either questions the employer has itself or questions the employees ask the employer.

Our team base language is English. Most questions you still need to think of, are standard for our team. Please connect to the payroll team with your payroll need.

Tax is exciting

We think tax is exciting. Exciting is hiring employees. That implies your business is growing and you need support. We very much appreciate it if we can assist you with this service need.

Resident payroll versus non-resident payroll

Resident payroll versus non-resident payroll

Resident payroll versus non-resident payroll, is this actually a choice? We think it is, in an international situation.

Resident payroll versus non-resident payroll

In an international situation we have the opinion that there is a choice between a resident payroll or a non-resident payroll. That said there are limits to this choice.

Often we are informed that an foreign employer is reluctant to set up a payroll in the Netherlands as that results in all kind of other obligations. In a resident payroll situation that can indeed be the situation.

Resident payroll versus non-resident payroll

What is a resident payroll?

A resident payroll is that of an employer who has an address in the Netherlands also referred to as permanent establishment. Such an address requires the company to register itself with the Dutch Chamber of Commerce. Assuming no Dutch legal entity was set up, this is regarded a branch office. This branch office has identical obligations to a Dutch legal entity.

The above is also triggered when the employee rents in the name of the employer a desk at a place like wework, spaces or similar work place providers.

The result is indeed the foreign employer not only needs to file wage tax returns for the employment. Also Value Added Tax returns and a corporate income tax return is required.

Moreover, to comply with international accounting rules, the Dutch branch only employing a staff, needs to invoice the head office. An invoice for the costs of the payroll plus a margin on top. This is in line with the at arms’ length principle.

What is a non-resident payroll?

A non-resident payroll is that of an employer that has no address in the Netherlands. No permanent establishment. Hence no Chamber of Commerce registration, no Value Added Tax obligations, no corporate income tax obligations. Only the obligation to pay the correct amount of Dutch wage tax to the Dutch tax office.

A person being the permanent establishment

In the event the foreign employer has no address in the Netherlands, it can still require an obligatory resident payroll administration. That is the situation when the director of the company turns out to be the employee in the Netherlands.

A director who is authorized to represent the company is in person the permanent establishment. This requires the employer to register and file Dutch tax returns. If that is causing too much hassle, maybe it is an idea to resign as director?

Tax is exciting

We think tax is exciting. Assisting you with the best type of payroll for your organization is what gets our payroll team excited. Interested in our full service portfolio. Contact the team at payroll@orangetax.nl

Laura is the OrangeTax payroll manager

Social employee premiums and sector code, what is that?

Social employee premiums and sector code, you might have come across that if you employ a staff. What is a sector code?

Social employee premiumes and sector code

The moment a company informs the Dutch tax office that they employ an employee, the Dutch tax office issues a wage tax number. At the same time the Dutch tax office indicates in what type of sector code the company is in. In the event it is not clear by the tax office what are the company activities. The tax office will contact the employer to get more information.

The sector code

The employer runs a payroll for the employee. The employee is than in normal situations also socially insured in the Netherlands. You might agree that a desk job is less hazardous than working on a construction site.

The level of job hazard determines the percentage the employer need to contribute to the social premiums. The saver the job, the lower the percentage.

Indefinite period of time employment contract

The sector code set the base percentage applicable as social employee premiums. The type of employment contract also influences the premiums. As the Dutch Government is supporting employers to provide security to employees in the sense of an employment contract for an indefinite period of time. These contracts result in lower social premiums as well. Under condition the indefinite period is mentioned in a signed contract.

Increase of employee social premiums

The moment an employer terminates the employment of an ill employee, this has an impact. As the Dutch Government is keen on healthy working environments, an employment terminated while the employee was ill, will result in higher employee social premiums for the employer two years later.

In such a situation it is very important to have both an Arbo service at your side that can navigate the employer through the obligations. Plus a labour lawyer to avoid more employers costs than is justified. Both can help preventing an employment being terminated while the employee is ill.

Social employee premiums

The social employee premiums vary every year, hence the January payroll is always slightly later than normal months. These social employee premiums are not shown on the salary specification, it is part of the employer costs. Paid towards the Dutch tax office. The Dutch tax office is in this case also social premium collector.

A1 statement

In the event the employee is socially insured in another country, the other country can provide an A1 or E101 statement. That is an EU form.

Regardless if the form is true or false, the employer can apply the provided A1 form. If it turns out to be false, the employer will not receive a penalty.

How can an A1 form be false? That can be caused in the application of the A1 statement. If an employee is an entrepreneur in his home country and based on that an A1 statement is issued. If that same person is employed in the Netherlands, the issued entrepreneur A1 statement cannot be applied for employment.

As we have experienced a lot of non-useable A1 statements are in circulation, we recommend the employers to connect to the SVB. SVB stands for Sociale Verzekeringsbank. Not to be mistaken with the Silicon Valley Bank. That is the social security Government organization. To verdict if the A1 statement is usable or not.

Tax is exciting

We think tax is exciting. So far we have not met one employer that is excited about paying social premiums for the employee. Still, the social system is one of the backbones of the Dutch system. Very important and you will notice the moment a benefit needs to be called in, like unemployment, disability, health care, it is very much appreciated.

Payroll in the Netherlands and labor law

Payroll in the Netherlands and labor law

Payroll in the Netherlands and labor law are going hand in hand. How does that work out, which law is applicable?

Payroll in the Netherlands and labor law

Payroll in the Netherlands can be part of your service needs, if you are an employer situated abroad. You do understand tax treaties dictate to tax income from employment in the country where the employment is done. The exception to this rule is the position of the director of the company. For that person most tax treaties have a separate article.

183-day-rule

The famous 183 day rule makes Dutch labor law is not applicable, if the 183 day rule is correctly executed. The latter is often the problem. Counting the days is the easy part. But this rule has three conditions to be met. And if all are met, indeed the income earned in the Netherlands for a period less than 183 days is not taxed in the Netherlands.

A result of that is, that the labor law of the home country rules, as the period worked in the Netherlands is disregarded as such.

Labor law and labor lawyers

We always recommend to connect to a labor lawyer, being the employer. Working with Boontje Labour lawyers, highly recommended.

We are tax advisors, so we know about tax. Labour law is a subject we come across, and within limits we can explain the rules. The moment it becomes specific or challenging, we are the first to refer you to a labor lawyer.

Working with Wouter Hes of Boontje Labour Lawyers learned me a lot over the years. The most recent fact is that you can employ an employee working for you in the Netherlands under your home country labor rules. The condition is that should the Dutch rules offer the employee an advantage over the home country rules, Dutch rules win.

Payroll in the Netherlands and labor law

Setting up Dutch payroll and labor law

You might have learned that the rules in the Netherlands are in favor of the employee. This should not stop you, the employer, from getting involved in a Dutch payroll. It does imply, as good behavior of a company, to learn more about the Dutch rules. To have someone at your side assist you with the Dutch rules and regulations.

Many companies in the Netherlands employee a staff, why would you not?

That said, most companies also take out an insurance. This insurance covers a period during which you are to continue the payment of salaries, while concerning employees are ill. That makes the risk smaller.

Most employers also take up a subscription with what we call Arbo related companies. Those companies can monitor for the employer how the well-being is of the employees in case of illness. And these companies can help the employer with complying of the formalities to the Dutch Government in case of illness.

Tax is exciting

We think tax is exciting. Runnig a payroll for you in the Netherlands gets us excited indeed. We will be pleased to introduce you to Boontje labour lawyers. Feel free to connect to our payroll team at payroll@orangetax.nl

Working remote in the Netherlands – running a payroll

Working remote in the Netherlands for a foreign employer is common. How this is to be set up from a Dutch wage tax point needs attention.

Working remote in the Netherlands

We get a lot of zoom requests to discuss working remote in the Netherlands and tax. These zoom meetings are free of charge, as we think they are awesomely exciting.

We update the person about the aspects of Dutch payroll and the wage tax rates. Seldom we see excitement in the face on the other end of the zoom with respect to our tax rates. Hence we wonder why the decision was made to move to the Netherlands. It turns out that having a Dutch partner is often the base of the decision to live in the Netherlands.

Running a payroll

The rule is that wage tax is to  be paid in the country where the work is actually been done. This implies Dutch tax rules apply to working remote in the Netherlands for a foreign company.

We are quick to update the candidate about the existence of the so called 30% ruling. This implies 30% of the gross salary is not taxed. That makes an enormous difference.

The foreign employer is not keen on running a Dutch payroll. It is assumed that a Dutch entity is required and everything that comes with running an entity. We have a solution for this:

The non-resident employment payroll

This payroll is for an employer that has no presence in the Netherlands. No presence implies no office or desk rented for the Dutch employee, the Dutch employee does also not have a director title of the foreign company. In that case there is no Dutch permanent establishment.

Without such an establishment we are able to set up the non-resident employment payroll. This payroll is identical to a similar domestic situation. The difference for the foreign employer is that there are no other obligations, than the obligations related to the employment.

OrangeTax payroll team

The OrangeTax payroll team is a very experienced team setting up non-residents and resident payroll administrations. The experience shows in predictions whether a 30% ruling would be granted or not. Or experience in Collective Labour Agreements being applicable or not. And if applicable, how to comply with them. Making international payments less complex as well. The team is also very active in responding to questions and committed to a minimal number of work days for the turnaround.

Tax is Exciting

We think tax is exciting. If you are now exciting about setting up a payroll with us, please connect to payroll@orangetax.nl and we are eager to assist you. Our fees you find already on our website www.orangetax.com

Laura – OrangeTax payroll manager