If you employ people in the Netherlands or send employees to the Netherlands to work here on assignment then you may have to set up a Dutch payroll administration.
If you have a company in the Netherlands where you employ people then these employees will be placed on the Dutch payroll administration. Due to the physical presence all employees automatically fall under the Dutch tax rules.
All foreign companies which send people to work on assignment in the Netherlands (or hire employees who already live in the Netherlands) are deemed to have 'fictitious residence' in the Netherlands for tax purposes. This means that all employees on assignment in the Netherlands are subject to Dutch income tax liability from day one of such an assignment, unless an applicable tax treaty states that the salary will remain taxable in the country of origin. The Dutch tax authorities are however very cautious on that point. If an employee has to follow the instructions of a client in the Netherlands then the client can be seen as material employer.
To prevent that the client will have to take care of the payroll, it is important that the foreign employer arranges the payroll administration in the Netherlands and makes sure that every month the right amount of wage tax and premiums for the social security are withheld and paid. This is also applicable to individual contractors. They may be able to work under their foreign Ltd but that is something which must be approved by the Dutch tax authorities.
If a foreign company doesn't follow the Dutch rules the client for whom the employees are working in the Netherlands can be held liable for the wage tax debt, premiums social security and possible fines. This can lead to serious consequences.
Expatax is a payroll bureau outsourcing service providing payroll services in the Netherlands for businesses of all types.
We currently have hundreds of payroll clients as our outsourced bureau services are highly recommended due to our high standard of client care, accurate processing and the payroll training we give our motivated staff. Some have been with us since we started our company due to the exceptional quality of our payroll service. Our clients range from companies with only one employee to companies with 1,000 employees.
As no business is the same, we take a close look at your requirements before providing you with a quote. We take care in planning the payroll service to suit your or your clients existing internal systems. Your company will save on internal costs of paperwork, software updates and complex payroll calculations which should be taken into account when evaluating the service. Please contact us for more information.