News - Netherlands

Netherlands - March 2016

Tax penalties imposed lead to rejection of migrant sponsor licence

In the first case of its type, an employer has challenged the fact that their sponsor licence was rejected in court on the basis of tax penalties they had suffered, and lost their case.

Dutch employers are obliged to register as a recognised sponsor if they wish to hire employees from outside the EU, EEA or Switzerland under the highly skilled migrant program.  Only recognised sponsors may then use the accelerated application procedure to speed up their recruitment cycle.  Employers must be considered as reliable by the Immigration and Naturalization Services (“IND”) to be accepted for a sponsor licence, and as part of this process the IND checks whether any tax penalties have been imposed against the company.

In this case the highest Administrative Court agreed with the IND’s rejection of a request from an employer to become a recognised sponsor.  The reason for the rejection was that the tax authorities had previously held the employer responsible for incorrectly paying cost allowances tax free over three consecutive years when they should have been taxable, and had subsequently imposed additional wage tax assessments inclusive of penalties for the same offence.  

What does this mean?

Dutch employers planning on applying for a sponsor licence need to be mindful that one of the criteria for approving their application will be tax compliance.  In this case the employer must now wait for four years from the date at which the tax penalty was imposed to reapply for a sponsor licence.

Without the status of recognised sponsor, an employer cannot apply for a residence permit as a highly skilled migrant on behalf of his employees, and will need to use the normal process which is more cumbersome and lengthy.

What should employers do?

It is not uncommon for wage tax penalties to be imposed as a result of a tax audit and employers should review their pay and benefits arrangements to ensure that they would be deemed compliant.  

Further information

For further information or to discuss any of the issues raised, please contact Wendy Terporten on +31 10 224 64 34, Loyens & Loeff Netherlands.

Further reading

Ruling 201502719/1 / V1 (Dutch)

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