Discover how we helped a Dutch company compliantly hire a foreign executive working between two countries. Expert guidance on tax residency, social security, payroll implementation, and the 30% ruling for cross-border employment.
A Dutch company wishes to hire a foreign individual for a key executive role within the company. During his employment, the foreign individual continues to reside in his home country and is expected to work for a certain percentage of his total working time in the Netherlands and also partly from his home office in the home country.
The Dutch company wishes to understand the tax and social security position of this individual, including the implications and obligations for the company. We discussed in which capacity (director/employee status) the individual will be hired, as this is relevant for the taxation of the remuneration provided to the individual. We liaised with our Taxand colleagues in the foreign country whether the home office would create a permanent establishment risk for the Dutch company in the foreign country.
The Dutch company also required detailed information to be compliant for the Dutch and foreign payroll administration of the individual and wishes to know how the gross salary and additional allowances should be taxed and implemented in the payroll.
Understanding the tax and social security implications of hiring the foreign individual both in the Netherlands and in the foreign country by applying the relevant domestic laws, tax treaty and social security regulations
Implementing the correct payroll in the Netherlands as well as in the home country of the individual considering the correct tax and social security position of the individual and applying the salary split principles in the payroll
Checking whether the individual is eligible for the Dutch expat ruling (30%ruling), whether the individual requires a work permit.
The Process
Tax position analysis - Assessing the tax status of the foreign individual resulting that the foreign individual became a non-resident taxpayer in the Netherlands and remains a resident taxpayer in his home country. Liaising with our international Taxand colleagues that the home office in the foreign country did not create a permanent establishment risk in the foreign country for the Dutch company.
Social security analysis – Assessing that the home country social security system applies and A1 statement was filed for to demonstrate the applicable system.
Payroll implementation -Applying for a Dutch citizen service number (BSN) for the individual and preparing the salary split calculations in the Dutch payroll where the tax payable in the foreign country is correctly included. Assisting through our international Taxand network with the set up and processing of a shadow payroll in the home country to correctly calculate and remit the home country social security contributions.
Taxable wage & Work permit review -Assessing and calculating of the Dutch taxable wages considering the fiscal qualification of the foreign social security contributions and assessing that the foreign individual did not require a work permit in the Netherlands.
Expat ruling and Outcome – Informing the Dutch company on the conditions of the expat ruling and filing for the ruling with the Dutch tax authorities as well as a successful start of the employment of the foreign individual where the Dutch company is fully compliant with all the required tax, social security and other compliance obligations in the Netherlands and the foreign country.
A large private investor with an extensive Dutch real estate portfolio was presented with the opportunity to demolish a leased property and develop a mixed-use project at this location, comprising residential units (apartments), offices, commercial spaces, and a hotel/restaurant.
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