When another company transfers employees to you, this company is seconding personnel to you. Every form of seconding personnel is covered by the “secondment declaration”. For example: getting employees through an employment agency, secondment or literally loaning employees to another company. Once you hire employees from another company, you are the “borrower”. The company that is seconding employees to you is the “lender”.
Do business with a reliable “lender”
While the lender is the actual employer of the seconded employees, this company (the lender) is officially responsible for the withholding of obligated taxes. Nevertheless, “the borrower” is held responsible by the IRS once “the lender” fails to fulfil these duties. To avoid problems like these, it is recommended to properly look into the following issues before joining forces with a foreign lender:
- Is the particular foreign lender obligated to pay taxes in the Netherlands (including payroll tax)?
- Is the particular lender obligated to pay premiums for national insurance, employee insurance and health insurance in the Netherlands?
The answers to these two points depend partially on the following:
- Which international treaties apply to this specific situation?
- What does Dutch legislation dictate regarding employees from the respective country of residence?
- Is the seconded employee from a treaty country or not?
As a “borrower” you can take the following actions in advance:
- Screen the lender
- Open a G-account
- Pay the payroll taxes directly to the IRS
1) When you screen the lender, you can:
- Retrace any references of the lender
- Request proof of the lender’s wage tax number
- Request proof of the actual withholding and payment of the particular payroll
- Request the original E-101 certificate
- Request the following of the seconded employee(s) for your administration: the name and address, date of birth, BSN (social security number), a copy of the identity card and a specification of the hours worked.
2) When you agree with the lender that you are going to use a G-account, then you should split the payment for the seconded personnel. On one hand you pay the lender for the labour of the seconded personnel. On the other hand, you do not directly pay the (presumed) income tax to the lender, but you deposit this into the G-account from which only the IRS can be paid. This way it is impossible for the lender to evade the obligated taxes, such as the payroll tax, premiums for national insurance, health insurance and employee insurance. By using a G-account you prevent that you will be held liable afterwards.
3) Instead of using a G-account, you can also agree with your lender to pay the payroll tax directly to the IRS.
Temporarily seconding personnel to the Netherlands
When a foreign employee doesn’t work abroad but only in the Netherlands, he or she is automatically insured in the Netherlands. However, if
this is a temporary secondment to the Netherlands, it is an exception to this rule. Seconded temporary employees are not insured in the Netherlands for the Health Insurance Act, the national insurance and employee insurance.
The exact application of this exception tot the rules varies depending on the following:
- The period of secondment in the Netherlands; is the period shorter or longer than twelve months?
- The application for the required statements: the country of residence of the employee and the location of the headquarters of the employer who is seconding employees to the Netherlands.
- Whether or not the seconded employee will be living in a treaty country
To ensure that the rules regarding seconding are properly applied, it is recommended that you get a proper briefing by the SVB (Social Insurance), the department of “International Secondment”.