Temporary Work Netherlands

For those employees who have been transferred temporarily from abroad to the Netherlands, certain tax consequences may arise such as tax liabilty and social security consequences (old age pension, Healthcare insurance act). Based on the circumstances the Dutch tax authorities decide where you are a Dutch tax resident. They look at several factors of relevance, such as:

• Where is the family home?
• Where are the children going to school?
• Where is the employment?
• Where are you insured?
• Where did you register yourself?
• What is your nationality?

Based on these factors the tax authorities will determine in which country you are a tax resident.

If you come to work temporarily in the Netherlands as an expat, you might be eligible for a special tax facility called the 30% ruling. The 30% ruling entails that the employer is allowed to grant a tax free allowance of 30% of the income of the employee. This 30% allowance is considered as a compensation for the territorial expenses the employee will have, since he/she is working outside of the home country.

Board members (or the supervisory board) of a Dutch company can also benefit from the 30% ruling in the Netherlands.

The wage tax is an advance tax payment for the income tax in The Netherlands. In this way, it is prevented that taxpayers have to pay a single large payment for income tax and social security contributions once a year. The employer withholds the wage tax at the time the employee receives salary. Most times the collected wage tax is sufficient, however there are situations that too much wage tax is withhold by the employer. For example employees entering the Netherlands during the middle of the year or those employees working on temporarily basis in the Netherlands (see here why?). In order to reclaim back the overpaid tax, a personal income tax return must be filed.

Click here for the filing deadlines for the personal income tax return

If you work temporarily in the Netherlands, you have Dutch source income. If you don’t receive an invitation from the Dutch revenue to file the income tax return, an invitation needs to be requested in case it can be foreseen that Dutch income tax is due in a certain year.

Based on our experience there is actually always a tax refund in case you work for a short period in the Netherlands.

What is the reason why you receive a tax refund?

• The calculation of the payroll tax is based on a yearly income. The payroll department is using tax rates which are applicable for a year. However, if you work less then a year, the tax rate is lower. The tax money can be claimed in the income tax return.
• Everybody who works in the Netherlands is entitled for a full tax credit. The payroll department takes into consideration for each month 1/12 of the tax credits (algemene heffingskorting / arbeidskorting). In case you did not work the whole tax year, you have not received the maximum tax credits yet. This can be claimed by filing a tax return.