fiscal info corporations

The obligation to register as employer in the Netherlands

Last updated: 02-12-2020

The obligation to register as employer in the Netherlands potentially starts as soon as work is performed in the Netherlands by employees and Dutch income tax and/or Dutch social security premiums are due in relation thereto. 

The registration of foreign company as employer in the Netherlands, and subsequent maintenance of a payroll, is obligatory if the employer has a taxable presence in the Netherlands because it has or it is deemed to have a permanent establishment or permanent representative in the Netherlands. In certain cases, the employer is deemed to have a permanent establishment in the Netherlands regardless its actual presence in the Netherlands, which can for instance apply to foreign employment agencies and payrolling companies.  

When there is no legal obligation to register as employer, the law offers the possibility that the foreign company opts to do so voluntarily, and the salary administration of the Dutch employee(s) is kept in the Netherlands. This situation often occurs because having a registered employer in the Netherlands is a pre-condition for applying the so-called 30% regulation (a special tax regime for incoming employees), or because the employer and/or employee prefer the "pay as you earn" system instead of the assessment of the employee(s) for the Dutch income tax, and the invoices from the Dutch social security authority for the payment of premiums due by the employer on behalf of the employee(s).        

The actual obligation for the levy of tax or social security premiums will only occur if certain specific conditions are met. There are various situations whereby employees of foreign employers are present in the Netherlands without Dutch payroll tax and/or Dutch social security premiums becoming due.

The best example of such exclusion are foreign based employees of foreign employers who visit the Netherlands for a business trip. More technical exclusions are usually based on applicable tax treaties, social security treaties or the EU Social Security Ordinance.

The most common exclusion for the levy of Dutch income tax/wage tax applies to foreign employees (i.e. without tax residence in the Netherlands) of a foreign employer who work less than 183 (consecutive) days in a year in the Netherlands, without their salaries being charged on to a Dutch establishment of the employer or a Dutch employer. The exact parameters of this '183-days rule' can vary per tax treaty and it is important to consider the fact that the Netherlands does apply a 'substance over form' approach when it comes to determining who the employer is for tax purposes. Typical payroll constructions and set ups of independent contractors may for this reason be vulnerable for scrutiny from the Dutch tax office.

Go to >   The payroll service package of TAXci

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