Working as director remote in the Netherlands is a red flag for us. Why that is, we would like to explain below.
Working as director remote in the Netherlands
Recently we see more and more directors of limited liability companies move to the Netherlands. It is either their partner who initiated the move to the Netherlands. Or the director was in need of change of scenery.
Walking permanent establishment
Being a director of a company basically implies you are a walking permanent establishment. A permanent establishment is a technical term in our profession. This implies the company has enough substance in a country that makes the company obliged to properly register itself.
A company registration in the Netherlands implies a Chamber of Commerce registration, corporate income tax obligation, possibly a Value Added Tax and Wage tax obligation. The accounts need to be done and the director needs to have a salary in the Netherlands, that meets the minimum requirements.
That you might not have thought about when your partner said: let us go to the Netherlands!
The tax treaties the Netherlands have, do contain the director article. That implies the regular employee article that does have the 183 day rule, does not apply.
The director article basically states that the salary of the director is to be taxed in the country where the executive decisions have been taken.
If your company is in South Africa, you have no options. If your company is in the United Kingdom, Germany, Belgium, France etc, you can agree to take executive decisions only while being in the office.
Resigning as director
The alternative is to resign as director. The moment the official director no longer applies to you, you have become the regular Joe working in the company.
You are no longer the walking permanent establishment and a local Dutch payroll is enough to pay the salary connect to the position.
Tax is exciting
We think tax is exciting. We are excited to learn you are a director. The question is, reading the above, are you still excited being the executive? Maybe not. That is an aspect we very much like to zoom about to see if we can come to a solution.