Doing business in the Netherlands can involve employment. Employment and Dutch taxation are sometimes a topic of hesitance due to the Dutch tax rates.
Doing business in the Netherlands
The tax treaties between the countries are clear on the topic where work is being taxed. Work done in a country is taxed in that country. There are exceptions to the rule, but please read the conditions of the exceptions. Or understand the aim of the exception and whether that is applicable. The 183 day rule is the most misunderstood exception.
The 183 day rule
The three conditions of the 183 day rule. First condition is that your employer sends you for less than 183 days to another country in a year. Second condition is that the employer cannot have a presence in that other country. Third condition is that the employer does not charge on the employer costs to a branch or fixed point in that other country.
All conditions need to have been met. Our experience is that people only count the days they spend in a country. But then the aim, why would you like to apply the 183 day rule?
The 183 day rule – tax residence
The employees we encounter move with their family to the Netherlands. The moment your central point of your life moves, your tax residence moves with you. Hence a family move implies a tax residence move. If you then make a claim for the 183 day rule, you fully misunderstood the rule.
The 183 day rule is made available for employer to send employees to another country and not make the employee a tax resident in that other country. The moment the central point of the employee already moves to that other country, there is no point to apply the 183 day rule.
Dutch payroll
Doing business in the Netherlands and employing a staff implies a Dutch payroll. Whether you establish a Ltd company, a branch or no presence at all. The moment your company employs a Dutch staff, the Dutch payroll applies.
Despite the Dutch tax rates, being employed in the Netherlands, paying Dutch tax, makes you part of the society. Suddenly you learn about the 30% ruling, the mortgage deduction, child related credits.
Dutch payroll – Dutch labour law
Employing a staff in the Netherlands, implies Dutch labour law is applicable. The foreign employer might find it convenient to continue the foreign employment contract, but that could hurt the foreign employer significantly.
Employment aspects as trial period, holiday pay, holidays, illness, disability and liability can make a Dutch staff expensive, if that is based on the incorrect rules. We recommend to connect with a Dutch labour laywer to get acquainted with the Dutch labour law.
The 30% ruling – 20% ruling – 10 % ruling
The once referred to as 30% ruling was an awesome ruling to attract knowledge from abroad. The higher Dutch tax was compensated by not taxing 30% of the gross income. Hence the name. The successful employee from abroad was not taxed on his or her worldwide assets. Stability for a five year period.
Unfortunately our politicians have poor understanding of how the money they spend is collected. Tax is the source. The 30% ruling makes less tax is collected, but is it? The knowledge we lack is imported, boosts our economy. A boosting economy makes money, and more tax is collected.
Still, the accountants running our country came to the conclusion the 30% ruling is too expensive. Needs to be a 30-20-10% ruling over the 60 months period in equal brackets. And no more exemption for taxation over the world wide assets for the successful employees using this ruling.
Personally I think this is bad management, do not kill the goose with the golden eggs is my opinion. But goose is on the menu right now.
Attracting staff – nearly no unemployment in the Netherlands
The lack of staff is a problem in the Netherlands. Unemployment rates are low. The baby boom after the second world war is now a pension boom. Nearly every commercial van has on the back a poster with ‘ Colleagues needed’. Not sure if such a poster makes you quit your job instantly to run to that company.
A big global French fries company makes the same request, but puts with the request what they have on offer. An education is offered plus a management position.
If you would like to attract staff, make it attractive for staff. Obviously you would like to employ more employees, but what do you have on offer?
Tax is exciting
We are excited about tax. Running your payroll in the Netherlands make our payroll team very excited. We can support your Dutch Ltd company, your branch. If you have no presence in the Netherlands and you like to keep that while employing a staff, we can assist you as well. Please inquire about our rates, or look for our rates on our website.
