I moved to the Netherlands, but continue to work for my own company abroad. This message we get nearly every day. Not a pleasant situation.
I moved to the Netherlands and continue to work for my own company abroad
The first question is what type of company do you own? If that is a so called transparent company. Hence not a legal entity, there cannot be a company in the other country. You are the company. Hence you work in the Netherlands for your Dutch company.
In the event your company is a legal entity, such as a US Inc or UK Ltd or German Gmbh. Then the company only stayed abroad if at least one of the directors on the board remained a tax resident in that other country. If you are the only director, the company moved with you to the Netherlands. Mr Martijn van Kessel of PWC I would like to quote who states “Management and control are important factors in this respect” . That is exactly the point.
You did it correctly, you appointed a local director and you moved to the Netherlands remaining also a director of the company. Then you are regarded for Dutch tax purposes a walking permanent establishment of your foreign company.
This implies you need to register a branch of your company with the Chamber of Commerce. The Chamber of Commerce will inform the Dutch tax office. The Dutch tax office will issue a corporate income tax number to you, a Value Added tax number to you and you need to obey the Dutch rules with respect to the minimum salary of the director/shareholder.
The transparent company implies you need to register in the Netherlands similarly. That is easily done. We do encounter, especially with the USA, that US clients prefer to pay local. So you can keep your transparent LLC up, use the facilities, but you need to invoice from NL to your US LLC in such a way that no result is left behind in the USA.
The reasoning: my clients are in the USA hence I should pay US tax, is not supported by law nor jurisprudence.
The branch registration mentioned above could be prevented if you are no longer the director of the company. If you are not the director, you are not the permanent establishment walking around, and no need to set up a branch office. Mind you, if you keep on acting like a director, the tax office might use the material explanation of the situation equaling that with you being the director.
The person moving to the Netherlands, Dutch tax applies on the world wide income Stating all the income is earned in abroad, hence no Dutch tax should be charged, is not correct. Taxation is based on facts and circumstances. If you have indeed travelled every day to work abroad, indeed, the other country can tax. But if the work was done remotely in the Netherlands, Dutch tax applies.
That is tax over the income. But then we also have tax over your worldwide assets. And the tax calculation of that so called Box 3 taxation has become more ugly.
I can only hope that the person who moved to the Netherlands did some investigation up front about the tax impact of the move.
Tax is exciting
We think tax is exciting. Obviously nobody is excited if we need to explain after the fact of moving to the Netherlands, the tax implications this has on running the company.
Then again, stating that no Dutch tax is to be paid, as the work is only done remotely in the Netherlands, but the company is abroad, is silly. If that were to be true, no Dutch company would exist anymore in the Netherlands. There are plenty other countries with lower tax rates.
The tax system is also not based on formal registrations, but on facts and circumstances. The fact is that you are in the Netherlands, then Dutch rules apply. We will be excited to help you to cope with this fact.