If you are an entrepreneur based abroad who makes employees available in the Dutch labour market (supplier ), you will be regarded as a withholding agent /contribution payer in the Netherlands. In that case, you will have to withhold wage tax and national insurance contributions from the wages of the employees made available. This tax and these contributions should be paid to the tax office in the Netherlands. In addition, you will have to pay employee insurance contributions to the Employee Insurance Implementing Body (Uitvoering Werknemersverzekeringen, or UWV).
Withholding
obligation for foreign suppliers
Under Dutch tax law, every supplier of staff is the withholding agent
of the wage tax, national insurance and employee insurance contributions
owed in the Netherlands. This rule (also) applies to all foreign employers
and foreign employment agencies that make staff available in the Dutch
labour market. The withholding obligation in the Netherlands will arise
regardless of the way in which an employee is supplied. As the supplier,
you will have to withhold wage tax and national insurance contributions
from the wages. In principle, these amounts are withheld from the wages
as one amount, known as payroll tax.
Wage tax
If you pay wages to an employee, you will have to withhold wage tax and
pay this tax to the tax office. Normally, the wage tax is an advance levy
in respect of the income tax owed. This means that the wage tax already
paid is usually offset against the amount of income tax owed by the employee.
National insurance
contributions
Like wage tax, national insurance contributions are levied on the employee's
wages. If you pay wages, you will have to withhold national insurance
contributions from the employee's wages and pay these contributions to
the tax office. The contributions are made to cover the following three
insurance schemes:
- statutory pension
insurance scheme (AOW);
- surviving dependants' insurance scheme (ANW);
- exceptional medical expenses insurance scheme (AWBZ).
Most of the national insurance schemes are administered by the Social
Insurance Agency (Sociale Verzekeringsbank, or SVB). The SVB is not responsible
for actually levying and collecting the contributions (this is the task
of the tax office), but sees to the implementation of the national insurance
schemes. As a foreign supplier, you are not in direct contact with the
SVB. Your (former) employee should contact the SVB of his/her own accord
if he/she believes himself/ herself to be entitled to benefits under any
of the three above-mentioned insurance schemes.
Liability for wage
tax or national insurance contributions may not apply
The fact that a foreign employee works in the Netherlands does not mean
that the Netherlands is always entitled to levy taxes or social security
contributions. Perhaps only wage tax is owed, or only national insurance
contributions. This is because various regulations apply.
In principle, Dutch tax law provides that wage tax is owed in the Netherlands. However, if the Netherlands has concluded a tax treaty with the employee's country of residence, this tax treaty will provide whether the right to impose tax belongs to the Netherlands or to the employee's country of residence.
The social security system under which an employee is insured is determined either by a social security treaty or by EC Regulation 1408/71.
Because two different types of rule are involved, it is possible that wage tax should be paid in the Netherlands under a tax treaty, while the same employee is insured and liable for social security contributions in another country (usually the country of residence) pursuant to a social security treaty or the EC regulation.
Obligations of
a foreign supplier
If you make staff available in the Dutch labour market, you should:
- Register as an employer/withholding
agent with the tax office;
- Register as an employer/withholding agent with the UWV;
- Establish the employee's identity;
- Issue a wage tax statement to the employee.
In addition, you will be responsible for the withholding and payment of
wage tax, national insurance contributions (together also known as payroll
tax) and employee insurance contributions. For this purpose, you will
have to set up wage records. Obviously, you will have to know from which
amount you should withhold payroll tax. This also involves:
- Setting up and keeping
wage records;
- Calculating the payroll tax;
- Completing wage tax
cards.