Full time employee and tax to be paid in income tax return

full time employee and tax

Full time employee and tax to be paid in the income tax return, how is that possible? The employer should have withheld enough tax.

Full time employee and tax

In the Netherlands the system is such that when you are a full time employee, the employer withheld exactly enough tax over your salary. The result is that you can fully spend your net salary. At the end of the year no additional tax is asked by the tax office to be paid.

Sometimes a full time employee is asked to pay additional tax, how is that possible?

Often we see that the employer has not paid enough attention. There is the situation an employee starts during the year employment with this employer. The payroll is done per calendar year. If the payroll is transferred from the one year to the other, the expected annual income needs to be adjusted. Based on that income, tax is calculated.

An employee starting in for instance May only has eight months of income. If that annual salary is used in the next year, where the employee works twelve months, not enough tax is withheld. How is that possible? The lower the salary, the higher the tax credits. If the predicted salary is lower than the actual salary, too much tax credits are used. Those are to be paid back in the income tax return.

Bonuses, RSU, share options, stock options

There are many names for incentives promised to employees. The one thing them have in common: it is all taxed salary. If an employee earns less or around the EUR 70.000 gross (first tax bracket) and is then given an incentive (second bracket is entered with higher tax), the employer should anticipate this. This is done in adjusted in the annual expected salary.

Full time employee and tax

The handbook of the Dutch tax office forbids updating the annual salary during the year. Fortunately the handbook is often seen of the tax office opinion, not a law. And if sometimes the annual salary is not updated during the year, the employee ends up with an unexpected tax bill.

Full time employee tax assessment – court case

A tax payer was charged with tax, even though she was a full time  employee during the tax year. She disagreed with the tax to be paid and went to court. The court dismissed her claim.

The reason for the dismissal is that she had multiple employers in a row during the tax year. Each employer calculated the correct amount of tax. However, if in the tax return the one income is put on top of the other, more tax was to be paid and less tax credits could have been applies.

The court ruled that each employer made no mistake in the payroll calculations, but that it is normal in a year that you have more than one employer at a time, to pay additional tax.

Tax is exciting

We think tax is exciting. We understand you are not excited to pay additional income tax. If we are asked about the cause and we see that the employer created this assessment, it does not feel nice to point to finger. We made no mistake, your employer did. Never a nice message.

The employer does not like us either if our remark is forwarded, we can understand that. We do hope the employer will pay more attention in case of bonus, full year employment or salary increase. Mistakes are made by humans, and process tax is still a job done by humans. Even though software is also not mistake free.

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.

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

Self-employed and employees

Self-employed and employees

The self-employed person is often referred to as ZZP entrepreneur. ZZP stands for working on your own without employees. Why no employees we wonder?

Self-employed and employees

You started your own company. You proudly express that you are the ZZP entrepreneur. But what if you expand, grown your business. Maybe employing a person will actually help your grow the business is a good idea. It is not a brilliant idea, as many companies have walked this road before you.

If you start a conversation in the Netherlands about employing an employee, chance is that within seconds very old slogans are stated. Slogans as “I wish my competitor many employees” . It is a negative slogan as if employees only cause you issues.

The question you need to ask yourself is where you would like to be in a five year period.

Employees make your business grow

In the event that the answer to the question where you will be in a five year period is a health running company, probably employees are part of that picture.

We support you taking steps to employee an employee. Maybe baby steps to start with. Baby steps are for instance to hire a part time person to assist you in your company. That will be a huge learning curve for you. Suddenly you need to make the employee actually work for you. That is not as simple as you might have initially thought it was.  Then again, also not rocket science as it is done before by many companies.

Employees are like human beings

Employees are like human beings, none are alike. They all have human issues. This should not stop you from hiring an employee. You probably have similar issues, being the human being yourself.

The task for the entrepreneur who has now become the employer is to find a way in the activities and the person you employed for the job.

Clients demand continuance of the business

Some entrepreneurs prefer to skip the whole employee part of a company and remain the ZZP entrepreneur. No employees and only subcontractors.

The problem in this case is multiple. At the start of the company this is all ok, but once you achieved a good client base, the client base expects a service from you. If you are on holiday, have the flue, or maybe in quarantine due to Covid, the company needs to be able to perform. That is the difference employees make.

Self-employed and employees

Self-employed and employees:

Being an employer is fun

You have started your company, you took baby steps in employing a staff. Now you have a number of employees, a client base who is happy to work with your employees. That is fun. It is exciting to walk into your own office and see your staff working for you. Besides that, you can also celebrate with your staff if the company is doing well or clients are very pleased with the service the team performed.

What is the first step to take?

We think that making a connection with a labour lawyer is helpful. Express you would like to become a client, request some services like an employment agreement and some basics how best to start with the limited period contract and probation period.

The moment you hire an employee, have the contract signed, the wage tax form, copy of the ID etc. You mark your calendar when you need to inform the employee if the contract will be extended or terminated. Step by step you learn if that employee fits with the company, you learn that in an interview a doubt equals a no. You grow as an entrepreneur and you become an employer.

Tax is Exciting

We think tax is exciting. Self-employment and employees, the payroll processing we are excited about to assist you with. We are eager to assist you with the calculations from a gross salary to a net, or a net to a gross salary. Or the employers costs calculation from gross or net. Our team is ready to assist you with either baby steps, puberty steps or grown up steps in the payroll administration.

Vacation allowance

Vacation allowance or holiday pay is a hot topic in the month of May in the Netherlands. Hot with the employees, as they are super enthusiastic. Hot with employers as they do not understand the sudden increase in employment costs.

Vacation allowance

Vacation allowance introduced in 1910 by our Government. Employees around that time earned enough income to pay for the rent, groceries and small joys of life like the cigarette. There was no budget for an actual holiday.

The holiday pay enables the blue color workers to enjoy a holiday.

How does vacation allowance work?

The holiday pay is 8% salary calculated over salary earned during the previous 12 months. Only regular earned salary applies. Bonusses are not part of the calculation. Whether you are a Dutch resident tax payer. Whether you are a non resident tax payer. The holiday pay applies to you being employed by a Dutch employer.

Working remotely for a foreign employer from your home in the Netherlands, makes you entitled to the vacation pay. The rule with remote working is that the place where you actual perform the job is the country that can tax the salary income. If you work from home for a foreign company, Dutch wage tax applies. The moment Dutch wage tax applies, Dutch labour law applies as well. Part of the Dutch labour law is the holiday allowance.

Vacation allowance
http://www.orangetax.com

How does the holiday pay work accounting wise?

The payroll ran for the employer takes every month already into account 8% of the salary of that month for the vacation pay out moment. It is a reservation that falls free in the month of May or June. That implies the moment holiday pay is being paid, the employer does not have in that specific month double payroll costs.

What makes holiday pay vacation allowance?

The employer can argue that in December a 13th month is paid, that equals the vacation allowance. This is not correct. Such argument is not valid. Holiday pay is identified by law as an 8% remuneration paid in May or June.

If it is decided to pay the holiday pay in another month than May or June, such an allowance can then not be regarded to be vacation allowance. This implies the employees are no paid holiday pay and can still claim to be paid the holiday pay.

Some internationals are unfamiliar with the concept of holiday pay and prefer to have 1/12 of the holiday pay paid out monthly. This aspect can be agree in the employment agreement.

Tax is exciting!

We think tax is exciting. Vacation allowance is exciting! Research learned that most employees do not actually use holiday pay for vacation, but to either pay outstanding debts or larger purchases like a TV, scooter or things like that.

UK Ltd contracting in the Netherlands

On a daily basis we are contacted about a UK Ltd contracting in the Netherlands and how Dutch tax can be avoided. What is happening?

UK Ltd contracting in the Netherlands

Part of our core business has become explaining UK Ltd companies about the rules we have in the Netherlands.

The standard message is more or less like this: we have won a contact in the Netherlands, we will be paid by a UK Ltd company in the UK. Low salary, high dividend. Can you assist?

Obviously not, hence this article.

UK Ltd contracting in the Netherlands
UK Ltd contracting in the Netherlands

Anti exploitation rules

In the Netherlands we have anti exploitation rules as some Dutch employers were exploiting Polish fruit pickers. I doubt any of the UK employees earning on average EUR 8.000 a month experience the feeling of being exploited. Nevertheless, these rules also apply to them.

What do anti exploitation rules imply?

The UK Company needs to register the UK Ltd with the Dutch Chamber of Commerce as so called Waadi employment agency. The Dutch Chamber of Commerce reports this company to the Dutch tax office. Then a Dutch Value Added Tax number is issued. A Dutch wage tax number with the ABU collective labour agreement is issued and a Dutch corporate income tax number.

The UK Ltd needs to run a Dutch payroll under the ABU collective labour agreement. The philosophy of high dividend low salary is not accepted in the Netherlands.

The penalties for not complying are huge.

Tax-is-exciting

We think tax-is-exciting, paying a lot of tax can be exciting too! That implies you earned a lot. Then again, not everybody thinks the same. Solutions are brought to light that the Dutch tax office has already ruled.

We cannot assist WAADI companies as we cannot run the ABU collective labour agreement. I hope this article updates the UK Ltd contracting companies about the obligations in the Netherlands.

Pilot taxed in the Netherlands

One man company bookkeeping

Pilot taxed in the Netherlands if often an undesired outcome for the pilot it concerns. Tax treaties between countries can be different. This article is about the UK.

Pilot taxed in the Netherlands – court case

A Dutch national registered in the Netherlands who is considered a Dutch tax resident took up employment with an airline company in the United Kingdom.

In the year 2015 the pilot started in April and worked 136 days for the British airline and he flew 81 days international and the other days national.

In his Dutch income tax return the pilot reported his income and claimed a double taxation relief for roughly half the gross earned income. This double taxation relief the pilot based on the fact that there was a distinction in flights he has done locally in the United Kingdom and internationally.

The full double taxation relief was denied by the Dutch tax office. In appeal in court the pilot explained the distinction in flights. The court ruled that international traffic phrase in the tax treaty does not acknowledge a distinction, hence a distinction is not in place.

The second reason for appeal was that other tax treaties ruled differently where a pilot is being taxed. An unfair difference. The court is aware that other tax treaties have other agreements, but the tax treaty applicable in this case was the one with the United Kingdom.

Pilot taxed in the Netherlands

Pilot taxed in the Netherlands – tax treaty

Tax treaties are agreements made between countries which country and tax what. All agreements are as much as possible in line of each other. Sometimes there is an article that differs and the pilot article is one of them.

In article 14 sub 3 of the UK NL tax treaty the income of the pilot is taxed in the Netherlands.

Pilot not taxed in the Netherlands – opportunity

Pilots that are employed in the Netherlands often are not that amused by the Dutch tax rates. These pilots then move their fiscal residence to another country such as Cyprus or Malta. Then the Dutch airline no longer needs to withheld tax, but social premiums are to be paid in the Netherlands. This exception we can request for you, if you are a pilot that is. Feel free to contact us.

Tax-is-exciting

We think tax-is-exciting but not everybody is very much excited about the Dutch tax rates. This pilot became creative in his tax return. He claimed a double taxation relief in 2015 and only in 2020 and many consultancy costs further the claim is finally denied.

Creativity is a virtue, but tax wise a nightmare. So please before you become too creative, contact us and we share our excitement or not over your thoughts.

Sorry for the dashes in the middle of the word tax-is-exciting. Apparently Google has a dirty mind and sees only a three letter word that we refer to when we practice to reproduce ourselves. Anything related to that word is spam, hence this devout solution.

Start a remote work place

deductible costs

Start a remote work place or start employment with a foreign employer is something  we see happen more and more. How is a remote work place taxed?

A remote work place

Internet makes the world smaller and we see that foreign employer like to keep employed their employee that moved to the Netherlands. The move to the Netherlands is often initiated by the partner. The partner is offered a position in the Netherlands, or wants to return to the Netherlands or has another reason to move.

Can you have a remote work place?

Yes you can.

The rule is that you pay tax in the country where the work is actually being done. That implies you need to pay Dutch wage tax over your salary from the foreign employer. The foreign employer therefore needs to set up a Dutch payroll. In order to be able to set up a Dutch payroll a Dutch registration needs to be made.

The moment the Dutch registration is made, the foreign employer has become a Dutch employer for the remote work place. That implies the employee in the Netherlands is subject to Dutch social premiums. In case the employee prefers to remain socially insured under the foreign employer country system, this needs to be applied for via the proper institutes.

a remote work place

Will the foreign employer become exposed to taxation in the Netherlands?

It depends on how the employer will be registered, but if exposure is not desired, then the employer can be registered at a very low exposed manner. Low implies only exposed for the tax to pay over the salary of the remote employee.

Is a remote work place different from a regular Dutch employment?

Not at all.

  • Dutch labour law applies, even if the employment contract is based on foreign rules and regulations.
  • Dutch tax is to be paid.
  • Dutch incentives such as the so called 30% ruling can be applied for.
    If the employee purchases a house in the Netherlands, the mortgage inters can be deducted. The remote worker is like a domestic Dutch employee.

Tax-is-exciting – set up

We are very much excited to assist you to persuade, if necessary, to have your foreign employer comply with the Dutch rules and regulations. At the same time we understand the foreign employer being hesitant to enter a country, especially the Netherlands, with its own rules of taxation.

Hence we offer a low exposed tax registration for the foreign employer, where the foreign employer does not need to be afraid to become exposed to any other tax than the tax related to the employment of the remote worker. This is possible when certain conditions are being met, and we will be glad to share these with you the moment you inquire about a set up.

At the same time we need to inform the foreign employer that Dutch rules and regulations with respect to labour law apply, hence we suggest to set up a Dutch contract for the remote worker. Or at least have contact with a Dutch labour lawyer.

Are you as employee interested, contact us and we provide you with information you can show your foreign employer. This will help making the decision.

Are you the foreign employer, contact us and we can set up quickly the nonresident employer payroll for you.