Withholding tax obligation

If you are living outside of the Netherlands as an employer and/or your business is located outside of the Netherlands, then you still might have to deal with the withholding tax obligation that applies to all your employees who work for you in the Netherlands.

Withholding tax obligation is applicable in one of the following scenarios;

  • You have a branch, office, workshop or factory in the Netherlands. This is also called a “lasting or permanent establishment”. The implementation of a project in the Netherlands can also be considered as a permanent establishment.
  • Your company has a permanent representative in The Netherlands. To be considered as a permanent representative, he or she must meet the following requirements:
  • The representative is not operating independently from your company
  • The representative has a mandate on behalf of your company to close contracts/agreements
  • The representative regularly uses this mandate to close contracts on your (company’s) behalf.
  • Your company is seconding employees in the Netherlands, for example through an employment agency.
  • You have employees who work (over) 30 consecutive days above or in the North Sea extraction area.
  • A situation where Dutch income tax applies to the earnings of (a number of) your employees, while you also maintain a payroll in the Netherlands and have requested the Dutch IRS to designate you as a withholding company.

Regarding the withholding of these income taxes, as well as withholding national insurance contributions, the income-related contribution to the Health Insurance Act and the insurance premiums for employees apply, along with the regular rules for living and working in the Netherlands.

Note: Are you, as an employer, established abroad and are you not required, according to regulations, to withhold income tax, national insurance contributions and the income-related contribution to the Health Insurance in the Netherlands? Then, in some cases, you might still be obliged to pay insurance premiums for employers. For example, you might pay insurance premiums for an employee who has social insurance in the Netherlands.

For further information about this topic, please contact the IRS Office of Foreign Affairs in Limburg (Heerlen). From the Netherlands: (055) 5385385. From abroad: +31 555 385 385. Open from Monday to Thursday from 08.00 a.m. to 20.00 p.m. On Fridays from 08.00 – 17.00.