PAYROLL TAX ONLY REGISTRATION
Foreign companies who do not have a permanent establishment in the Netherlands, but wish to hire Dutch based employees, are not obliged to withhold Dutch payroll tax on the salary of the employees.
However, if the employee is living in the Netherlands and is liable to income tax in the Netherlands, this means that the employee is entitled to Dutch social security benefits. The employer is obliged to pay employers’ contributions for social security. The company should register for employers’ contributions with the tax authorities. The contributions consist of unemployment- and disability benefits and health care premiums. The employers’ contributions depend on the employee’s salary and will amount to a maximum of approximately € 10,000 per annum per employee.
Without this registration, the tax authorities can impose a fine that can go up to 50% of the outstanding amount and levy the contributions retroactively.
Registration for payroll tax
In case the company also registers for payroll tax, there will not be any consequences for them, other than the obligation to withhold payroll tax on the employees’ salary and to pay the payroll tax and employers’ contributions to the tax office in time. For the employee however, it will make a difference, since instead of having to pay his tax obligation in a lump sum, it will then be taken out of his salary on a monthly basis.
The registration of the company, as well as running a Dutch payroll, can be outsourced to Broadstreet. By outsourcing the payroll, the employee will receive a salary slip on a monthly basis and the employer will be informed how much net salary the employee is entitled to and how much payroll tax and contributions have to be paid and before when.