You should calculate payroll taxes on all forms of remuneration the employee receives on the basis of his/her employment. The main form of wages is 'wages in money': salary, holiday pay, overtime pay, commission, 13th month's salary, and anything else you pay to the employee in money as a remuneration for his work. Other forms of wages are remuneration 'in kind' and the so-called (tax-free) allowances and provisions.

Tax-free expense allowances and provisions in relation to non-resident employees

Practice has shown that the costs incurred by non-resident employees for the purpose of exercising their employment in the Netherlands can roughly be divided into two categories:

• extraterritorial costs: extra costs of a temporary stay outside the country of origin (these include double housing costs and costs of travelling between the country of residence and the Netherlands). Employees fulfilling certain conditions may be eligible for the 30% facility in respect of these extraterritorial costs;
• other costs: these include the costs of commuting, industrial clothing and professional literature.

Cost allowances are part of the wages insofar as they are not exempt under Dutch tax law. The (tax-free) allowances and provisions that can be made to your employees are listed in the manual 'Wage tax, national insurance contributions and employee insurance contributions', issued to every withholding agent.

As the employer, you can pay a tax-free reimbursement for the costs actually incurred by the employee in connection with his work. One condition in this respect is that you should demonstrate that the costs for which the reimbursement is paid were actually incurred.

Please note:
The (original) invoices and bills showing these costs should be retained with your accounts. You should also bear in mind that (intended) expense allowances can only be paid on the basis of Dutch tax law. Whether different rules and amounts are applicable to your staff in the country where you are established, is irrelevant. After all, the staff members supplied are working in the Netherlands, which means that only Dutch tax law will be applicable.