Tax and Social Security Considerations in Respect of International Mobility in the Netherlands
Johan Vrolijk and Lotte Hover-Boon from Stibbe’s tax law practice in Amsterdam discuss certain Dutch tax and social security considerations in respect of international mobility.
For the past few years, working from a location outside of the corporate office of the employer has become more popular. This also includes working remotely from another country (eg, from the employee’s home office). However, the increased possibility for an employee to work from another country raises tax and social security issues that affect both employees and employers. In this webinar, Johan and Lotte discuss certain relevant considerations for employers.
There are various forms of international mobility, for example, an employee who works:
- from home;
- from an address in their country of residence;
- at an address outside of their country of residence; or
- from a foreign office because of being a frontier worker, for instance, someone living in Belgium, working in the Netherlands, and vice versa.
However, the increased possibility for employees to work in another country raises tax and social security issues both for employers and employees.
Some of the key points in relation to international mobility categorisation are as follows.
- The impact for the employer – the permanent establishment risks, the potential risk for higher tax costs, and an increase of tax disputes would fall within this category.
- The risk for the employee themselves – that would be, for instance, the risk of double taxation, and additionally you have more practical points of attention, for example, arranging work visas or keeping a detailed travel calendar.
“From a tax perspective, it is important to realise that cross-border employees may be taxed in multiple countries…” (Johan Vrolijk, 2:57)
With respect to international mobility, the two main allocation rules are income from dependent personal services and directors’ fees. As a principle, employment income is taxable where the work is performed, but the country in which the employee is resident may exclusively tax employment income provided three conditions are met.
- The employee is not present for more than 183 days in the country where the work is performed, over the course of a year.
- The relevant payment should not be made by an employer which is resident in the country where the work is performed.
- The employer should not have a PE (permanent establishment) in the country where the work is performed which bears the remuneration.
There are many points to consider, and the information provided in this webinar is an overview, and is, therefore, not exhaustive.