for overseas companies with a branch in The Netherlands
Anyone who intends to employ staff in The Netherlands must register as an employer. It doesn't matter whether you have a branch/permanent establishment or a company established in The Netherlands. When you are registered you will receive a payroll tax number. This number is used to file payroll tax returns.
Foreign companies in The Netherlands
Foreign companies are, the same as Dutch companies, obliged to register as an employer and deduct taxes from their employees if the following requirements are met:
The registered office of the company is based in The Netherlands
The company has a permanent establishment in The Netherlands (see our blog about substance)
Personnel is a post or hired in or to The Netherlands
The employee works on the shelf of The Netherlands
The employee falls under the Dutch insurance schemes
The employees’ data has to be kept in their personal records. As an employer, you are responsible for the amount of deducted payroll taxes being withheld from the employee's salary. Meaning that you have to calculate the right amount of contributions and taxes. After this, a tax return needs to be filed before the date the taxes become due. Looking for someone who can take care of this for you? Get in touch.
When temporary personnel is hired through an intermediary or subcontractor things are different. These intermediaries or subcontractors are liable for the contributions and the payroll tax for those employees.
What does this mean for a shareholder/employee living outside The Netherlands?
In most situations, foreign shareholders and employees only pay taxes in The Netherlands. When the shareholder/employee does not reside or has income in the Netherlands, they mostly are not covered by the Dutch national insurance schemes. Also, no social security contributions have to be paid.
The difference between taxes and social securities is that taxes go to the state and social securities go to insurances, pension schemes, etc. Meaning that taxes are for the common good and social securities are for private good.
There are situations in which the shareholder/employee, who is living outside of The Netherlands but is working in The Netherlands, is covered by the Dutch national insurance schemes according to national and international regulations. This depends on the kind and amount of income the shareholder/employee has in The Netherlands.
When an employee is living and working in The Netherlands taxes are due in The Netherlands regarding the worldwide earnings. When an employee works in The Netherlands but lives in another country, the Dutch tax only applies to the income related to the Dutch income. Social securities are due in the country where the employee works most of his time (>183 days)
When an employee is residing inside of The Netherlands and working inside The Netherlands they may be entitled to the so-called 30% ruling. For more information see our article regarding this subject.
We can help you figure out whether these contributions are due or whether you or an employee are entitled to the 30% ruling. Underneath is an example of the 30% ruling with the minimum wage of € 4.500 for highly skilled migrants.
Based on this salary slip, the employer can calculate that his total employer's expenses will be:
Gross wage € 4500
Holiday pay + storage of holiday pay (reservation) € 432
Social security charges € 619.29
Total employer's costs € 5551.29
This overview assumes that the employee is tax resident in the Netherlands if not, extra tax incentives will apply, and he will not pay the full taxes. An exemption for social securities and taxes can be applied for, in several cases when an employee is working less than 183 days in the Netherlands.
The same rules apply to a branch in The Netherlands as a company established in The Netherlands. Meaning that when the above-mentioned requirements are met you are liable to withhold payroll taxes and filing the tax return. For personnel hired through an intermediary or subcontractor, the intermediary or subcontractors are liable for the contributions and payroll tax.
For shareholders/employees working in The Netherlands but residing outside of The Netherlands, it depends on the facts whether they are covered by the Dutch national insurance schemes or not. We can help you with all issues regarding this subject. Click the button below to get in touch with our experts.
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