Do I pay tax on my salary in the country where my employer is based or in the Netherlands where I work?

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Question:

I am working for a Spanish company, with a Spanish contract, but my company has moved me to the Netherlands to work for another company inside the same holding since I started with them last August. Where should I pay my income taxes? Physically I am working in the Netherlands, but the contract and the company are both Spanish and it is the Spanish company who is paying for my services. Is there any tax that I should pay in the Netherlands?

Answer:

Since you are actually working in the Netherlands you will have to pay tax in the Netherlands on the income you receive from your Spanish employer. Being a resident of the Netherlands you are already taxed here on your world wide income, which is only different based on a higher right of another country based for example on an applicable tax treaty. Like the standard tax treaty the tax treaty between the Netherlands and Spain divides the right to tax your salary to the Netherlands based on the place of work.

Being an employee it is the responsibility of your employer to arrange the withholding of wage tax on the salary which is paid to you. This means that your employer must register with the Dutch tax authorities as a foreign employer and set up a payroll administration in the Netherlands. If your employer has arranged an A1 statement it is possible to keep the payment of social security contributions in Spain.

Expatax can arrange the registration and take care of the payroll administration. See also https://www.expatax.nl/employers/payroll/ for more information about the legal requirements and our services.

It is also possible that you are put on the payroll of the company to which you are seconded but this will require additional work with respect to the applicable employment contract, reimbursement of costs etc.

Since you are seconded within the same group of companies the so called 183 days ruling will not be applicable either. So the fact that you work less than 183 days in a year in the Netherlands will not affect the obligation to set up a payroll administration in the Netherlands.

The above means that you will also have to file an income tax return in the Netherlands. Expatax can assist with that too.