Foreign employers working in the Netherlands
The landscape of global mobility is undergoing a significant transformation. With evolving legal frameworks and technological advancements, the way people and organizations operate is shifting. Companies that adapt to these changes and continuously refine their strategies will lead the talent market and create long-term value. Sending employees to the Netherlands, you will need to engage with tax authorities across multiple jurisdictions, withholding obligations, and trailing liabilities.
A brief guide to hiring your first employee in the Netherlands
Entering the international labour market presents various challenges, including diverse employment laws, necessary certifications, and payroll obligations. Key steps include:
- Checking the applicability of the 30% ruling
- Concluding an employment contract
- Applying for a wage tax number (optional)
- Filing necessary documents in your wage tax administration
This guide provides a comprehensive overview of the actions required when hiring your first employee in the Netherlands.
Download our whitepaper 'Hiring your first employee in the Netherlands'.
Considering Dutch employment law for posted employees
International employment relationships may be governed by Dutch employment law if your employees work in the Netherlands. The 'Rome I Regulation' determines the applicable legal system. Even for temporary employment, certain aspects of Dutch employment law must be considered.
Voluntary registration as a withholding agent for Dutch wage taxes
Dutch law requires wage tax to be levied by withholding agents. As a foreign employer hiring a Dutch employee, you may be considered a withholding agent, though this is not always mandatory. In many cases, employees can pay taxes on their Dutch taxable income via their personal Income Tax Return. Weighing this option carefully before registering as a withholding agent is advisable.
Understanding the work-related expenses scheme
If you have employees on your payroll and withhold wage tax on their behalf in the Netherlands, the work-related expenses scheme applies to you. This scheme allows you to provide untaxed reimbursements, provisions, and allocations to your employees within a certain limit.
Impact of a salary split on the work-related expenses scheme
Under the work-related expenses scheme, employers subject to Dutch withholding tax can provide untaxed benefits within a specified limit. When applying a salary split, where another country taxes part of an employee’s income, it affects the calculation of the work-related expenses scheme.
The 30% facility: What is it and how to apply?
Employees relocating to the Netherlands from abroad may incur additional expenses, known as extraterritorial costs, which can include initial housing, visa applications, and medical examinations. As an employer, you can offer a tax-free reimbursement for these substantiated costs. Employees must provide invoices for these expenses, which you reimburse and keep in your records or you can apply for the 30% facility.
More information?
Navigating the complexities of establishing a business and employees workingin the Netherlands can be challenging. At ABAB Global Mobility Services, we offer comprehensive support to make working in the Netherlands into a success. Whether you are hiring your first employee or managing a team of internationally mobile workers, our global mobility specialists are here to help. With deep expertise in global mobility legal and tax, they will provide you with the insights and support you need to thrive in the Dutch market.
For more information, contact Clea Cremers, Global Mobility Specialist - Tax, at +31(0)77-3217715 or via email. Let us help you navigate the complexities of global mobility and set your business up for success in the Netherlands.
