Dutch tax decree on international short term
assignments

3 March 2010

At last the Dutch Ministry of Finance has issued
the Decree with guidelines relating to the
Supreme Court decisions of December 2006
relating to the so-called economic employer
concept.


Practical Solution

For practical reasons it has been determined
that, in general, during intra-company
assignments of 60 working days or less in a
period of 12 months, the host country company
will in general not be regarded as an economic
employer. Therefore, the wages of non-resident
employees relating to the Dutch working days
will not become taxable in the Netherlands.
Similarly, Dutch tax residents assigned to work
abroad will not be entitled to a relief of double
taxation while working for such a period abroad,
but will remain fully taxable in the Netherlands.


Regulations relating to withholding
requirements

On the basis of a previous approval, the Dutch
Group company (being the economic employer)
may act as the withholding agent for Dutch wage
tax purposes in the absence of a legal employer
in the Netherlands. This is important for,
amongst others, the application of the 30%
facility while working in the Netherlands. It was
also announced that new legislation will be
proposed to provide a legal basis for this
position.

Conclusion

The Decree provides more clarity on the tax
treatment of short term intra company
assignments. Still, companies need to
investigate whether they meet all the conditions
set and, furthermore, need to investigate the
consequences if the assignment exceeds 60
days. However, still situations of double taxation
or double tax exemption may occur. In such
cases the Dutch authorities may start
discussions with the other tax treaty country.

Next steps

It is envisaged that the Dutch tax authorities will
audit international companies on the tax
treatment of short-term assignments on a larger
scale. Companies (will) need to adjust their
internal procedures in order to be in compliance
with the various requirements in the Netherlands.


About the author
Taxpat was established in 2001 and is
specialised in expatriate tax issues.
They help employers (from small international
firms to large listed companies) to navigate
through the complicated rules and regulations
regarding (new) employees working in the
Netherlands. If you would like to understand
what this means for your company or your
specific situation, please call Taxpat at
+31 (0)20 675 0050

www.taxpat.com