Temporary Work in the Netherlands
Temporary work in the Netherlands or an assignment abroad is a subject many employees and employers have questions about when they enter the Netherlands for a secondment or a short term assignment.
What are the obligations if you work shortly in the Netherlands?
First thing which needs to be determined is if the Netherlands is able to tax the income for the short period you work in the Netherlands. If this is the case a payroll administration needs to be maintained.
Secondly, in order to work in the Netherlands you need to arrange a BSN number at the government. This can also be done as a non-resident.
As a full service provider MFFA Tax advice can support you with all tax related matters (answering questions, tax compliance and arrange payroll administration for the workers)
See also our article “commence and assignment in the Netherlands”
Working temporarily in the Netherlands (secondment / assignment)
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.
30% ruling – Temporary work in the Netherlands
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.
Wage tax Netherlands an advance tax payment
The wage tax is an advance tax payment for the income tax. 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.
Working temporarily in the Netherlands – filing the 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.
Want more information about temporary work in the Netherlands?
Do you want more info about temporary work in the Netherlands and whether you need to file a personal income tax return or that you can claim back tax? You can contact us through the contact form. You can also call us from within The Netherlands at (0)85 0030140 or call us from abroad at +31 (0)20 2615615.
For more info you can also check the English website of the Dutch tax authorities.