Wage tax/social security – withholding obligations for non-Dutch employers
New legislation offers relaxation of administrative burden for non-Dutch employers hiring out personnel to a Dutch group company.
By making their employees available to a Dutch group company non-Dutch employers are deemed to have a permanent establishment for wage withholding tax purposes in the Netherlands. Accordingly they must register with the Dutch tax authorities, operate a wage withholding tax administration and comply with all related requirements, such as filing wage tax returns and deducting/paying monthly tax.
As of 2013, and provided certain conditions are met, they can transfer the tax and social security withholding obligations to a Dutch group company due to the expansion of existing legislation.
In order to effect the transfer, the non-Dutch employer and the Dutch group company must file a joint application with the Dutch tax authorities who will grant formal approval if certain conditions are satisfied. The application should be made each time an employee is sent from the non Dutch employer. However if the non-Dutch employer seconds employees on a regular basis, approval covering all such seconded workers may be granted.
It is unclear yet whether a formal application has to be made now in existing situations in which Dutch group companies have taken over the obligations in the past on the basis of a former Directive.
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