- INTRODUCTION
- SALARY ADMINISTRATION
- LOWER “INCOME TAX” FOR FOREIGN EMPLOYEES
- 30% FACILITY
- COMPANY CAR
- REPRESENTATIVES
- SALARY SPLIT
INTRODUCTION
Accinterra is specialist in salary administration for foreign companies in the Netherlands. We deal with foreign representatives, directors operating from a foreign country, 30% facility in combination with tax free cost allowance, net salary agreements, salary splits, frontier workers and more.
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SALARY ADMINISTRATION
Like in many of the countries employees in the Netherlands have to pay wage tax and social securities over their salary. In the Netherlands the employer has to withhold these amounts and pay them directly to the tax office and the social securities board (in the Netherlands this is called the UWV). Accinterra will calculate for you the wage tax and social securities and communicate with you in English or Chinese to let you know what you have to do exactly.
If we take care of your salary administration we will provide you the following information, if you like also in English:
- salary slips of all employees in duplicate
- journal entry for your financial administration
- list of all the payments to the employees on paper or digital
- concept wage tax form
- year report per company (salary information per employee and in total)
Next to this we will take care of:
- reporting the employees to the UWV
- periodic check of the advance payment for the UWV (social securities)
- check on fulfilments of the CAO
- check on fulfilments of the tax law
- year reports to the tax office and UWV
- concept salary calculations on your request
If you have questions about the salary administration, like to receive draft gross-net or net-gross calculations including the total salary costs for the company, need information about the child care regulations or 30% facility, then you are at the right place. For taking care of your salary administration you can request for an offer free of charge at:
Accinterra BV
Attn: Salary administration
CYPRESBAAN 14A,
NL-2908 LT CAPELLE A/D IJSSEL.
Email: info@accinterra.nl
Tel: +31(0)10 2581818
Fax: +31(0)10 2581810
Often we receive questions about salary issues for foreign employees. Below you will find specific topics for foreign employees:
LOWER “INCOME TAX” FOR FOREIGN EMPLOYEES
The Netherlands is known for its social security scheme. Included in the lowest two income tax retas is a very high contribution for the national social securities (“volksverzekeringen”). Everyone working in the Netherlands is by law insured for these national social securities. In case of cross-border situations there is the possibility a treaty will apply. There is the European treaty that applies for all EU-countries and the Netherlands have a social treaty with some countries. According to the treaty employees who do not live in the Netherlands, but partly work in the Netherlands and partly in their country of residence, do not have to pay contribution for the national social securities in the Netherlands. Based on the treaty they are mandatory to be insured in the country of residence. As a result a very low amount of wage tax will be withhold from the first EUR 31,000 salary they have.
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30% FACILITY
Application and duration
An attractive regulation for foreign employees in a management position or with specific rare abilities is the 30% facility. With this facility 30% of the gross salary and rest of the taxed salary components will be considered as a tax free cost allowance. The facility has to be applied at the tax office by the employer and employee together and can be obtained for a maximum of 10 years. After 5 years there will be an interim test to exam if all the requirements are still fulfilled. The management position or rare abilities have to be proved by labour contract, education and references.
The 30% facility has to be applied within 4 months after the first day of employment in the Netherlands to make sure the facility can be used from the start. After these 4 months it is still possible to apply for the 30% facility, but then it can only be obtained as from the first day of the month after applying. The working period in the Netherlands will be deducted from the 10-years period.
For the application the following documents are needed:
- labour contract with the split of the 70% part and 30% part.
- Resume (CV)
- Work permit (if applicable)
In case of internal transfer:
- statement of the head office that the employee will be transferred and is working for at least 2.5 years for the group
- an organization chart showing the legal (shareholding) ties of the entities within the group
In case of specific rare abilities:
- statement of the last received salary
- statement of the specific abilities
If the employee has worked or lived in the Netherlands before, then these periods will be deducted from the 10-years period.
Directors
Directors on the payroll of a Dutch company can apply for the 30% facility, even though the director is living and doing his work outside the Netherlands. Directors are considered to work in the Netherlands. In other cases the employee has to work physically in the Netherlands. This is based on international tax treaties. For taxation in the Netherlands of non-directors it is required that the work has been performed in the Netherlands.
Changing employer
The facility has to be applied by the employer and employee together. When the employee changes from employer it is not possible to apply the 30% facility if the employee did not have it already with his first employer. It is only possible to transfer an existing 30% facility to a new employer. The new employer and the employee have to apply for the 30% facility again and it must be proven again that the employee still fulfil all the requirements.
No tax free cost allowance
After obtaining the 30% facility, most of the cost allowances that serve private needs are for 70% taxed with wage tax (for example housing costs and health insurance). Only schooling costs for employee’s children can be refunded free of taxes in addition to the 30% facility. Cost allowances for business reasons, like travel cost, business dinners and cost of cell phones can always be remunerated free of taxes.
Free housing
Housing costs for foreign employees can be refunded tax free during a maximum period of 2 years, if it is the intention that the employee will only stay for a short period in the Netherlands. In this case it is not possible to apply for the 30% facility. You choose for either the 30% facility (for 10 years) of for free housing (for 2 years). In case of a short stay in the Netherlands and if you have high housing costs it is maybe better not to choose for the 30% facility.
If you do choose for the 30% facility then 70% of the housing costs will be added to your taxable income. This means a lower net salary with the same gross wage.
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COMPANY CAR
How is this taxed?
The most popular secondary employment benefit is having a company car. The private benefit of having a free car is taxed in the personal income tax of the employee by adding yearly 22% of the new value of the car to his taxable income. A contribution of the employee paid from his net salary to the employer will be deducted from this taxable amount. Also any gasoline costs the employee pays himself can be deducted from this (but not further than nil). The 30% facility has no effect on the taxation of the company car. These employee still need to add 22% of the new car value to their income instead of 70% of 22%.
Not included in the salary administration
The taxes for the company car can not be processed in the salary administration. The employee has to report this at the end of the year on his personal income tax return, and pay the taxes by himself. The employer is obliged to report to the tax office about usage of the company car by the employee.
Payments paid by the employer will be fiscal punished
Employers who pay on behalf of the employee the taxes on their company car need to realize that this payment will be observed as additional net salary on which wage tax has to be paid. Eventually paying these taxes will cost the employer twice as much as the tax on the company car. It is very attractive to drive in an expensive company car, but for tax reason we do not recommend this, unless the employer is prepared to pay the additional taxes.
We suggest to make an example calculation in advance of the fiscal consequences of a company car.
Solution for net salary agreements
If the employer agrees on a net salary with the foreign employee and the employer will pay all the taxes, we advise to withhold every month the taxes for the company car from the net salary. Consequently the employer can pay the taxes on behalf of the employee at the end of the year. This withholding must not be described as “contribution company car”, because this will be seen as a deduction of the 22%, and not as a payment of taxes!
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REPRESENTATIVES
Representatives of foreign companies in the Netherlands are taxed in the Netherlands for the wage tax and social securities. It is very important to know what the exact job description is of the representative. In case he is authorized to arrange contracts, the existence of a permanent establishment will be assumed in the Netherlands, which will lead to more tax obligations, like having a financial administration and filing VAT and corporate income taxes.
What is arranged in the tax treaties?
In most tax treaties it is arranged that the representative has to pay his own wage tax and social securities in the Netherlands. There is no permanent established branch office in the Netherlands that can arrange that for him.
If your representative travels a lot or does not like to do administrative work or you are worried that the representative will not pay his taxes and social securities on time, then Accinterra has the following solution for you:
We open a joint bank account on which you will transfer the monthly total salary costs designated by us. From this bank account we will pay on your behalf the wage tax and social securities and the net salary. The bank will send you directly copies of the bank statements and you have access to the bank account by electronic banking (through internet). Possible pension plans can also be taken care of like this.
In this way the chance on penalties for not paying on time will be reduced.
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SALARY SPLIT
Some employees exercise their employment in more than one country. In this case it is attractive to think about a salary split. Under certain conditions the salary can be partly taxed in the country of residence and partly in the country where most of the work is done.
Employees who are not directors
In principle, income from employment described as salaries, wages and other similar remuneration packages, is being taxed for wage taxes in the country where the employee is actually working, giving rise to the possibilities of a salary split if an employee is working in more than one country.
Salary is normally taxed in the county where the employee is physically present when performing the activities for which the salary is paid.
An employee can apply for a salary split if he meets one of the following conditions:
- the employee is present in the country where the employment is actually carried out for a period or periods exceeding in aggregate 183 days in the fiscal year concerned or;
- the salary is paid by, or on behalf of an employer who is resident of the country where the employee is actually working or;
- the salary is charged to a permanent establishment or a fixed office location which the employer has in the country where the employee is actually working.
If an employee’s situation does not satisfy one of these conditions, the income is not taxable in the country where the employment is actually carried out, but in the country of which the employee is a resident and the employee will not be able to utilise a salary split for taxation purposes.
The income will be divided across the two countries and the employee benefits from a salary split because the effect of progressive tax rates will be spread over the two countries. The employee must be physically present when performing the activities for which the income is paid. Employer and employee must have agreed that part of the employment will be carried out in another country. This agreement has to be laid down in a written contract.
Directors
Managing directors are, by fiction, supposed to always work in the country of residence of their employer. In case of a group directors has establishments in more than one country, then managing directors of this group may benefit from a salary split if they are appointed as director in more than one country. It will be necessary to specify the time that is spend for each group company. This time schedule must be proven by afterwards by travel documents, agenda, correspondence etc.
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