Mazars the Netherlands International, integrated and independent professional services organisation. Specialised in audit, accountancy, legal, tax and advisory services. In the top ten of the Dutch audit and advisory firms. In the Netherlands: 10 offices - 800 staff. Experienced partner in advising companies to set up their business in the Netherlands in a tax efficient manner.
6 Attention points: General Open labour market ► regulated by EU regulations ► Hungarian citizens can travel, live and work without a permit in the Netherlands. General employment matters ► Hungarian employees are in principal entitled to a similar salary and reimbursement as Dutch employees; ► Regulations of Dutch Labour Law applicable: minimum wage (over 23 years EUR 1,424 gross per month), working hours (40 hours per week), safety rules and so on; ► Collective Labour Agreements: declared generally binding for all companies in that branch. Amongst others: salary, working hours, holiday, reimbursements.
7 Attention points: Subcontractor Hungarian subcontractor conducting business in the Netherlands Permanent establishment for tax purposes? Most relevant criteria based on the Tax treaty between Hungary – the Netherlands for subcontractors in the construction sector: “A building site or construction or assembly project constitutes a permanent establishment only if it lasts more than 12 months” In case of a permanent establishment then consequences for e.g. the Dutch corporate income tax and wage tax. Applying for Dutch tax numbers, filing tax returns, administration requirements, withholding wage tax and so on (see next slides). Advise: determine the start and expected ending date of the project. Make sure that all Dutch fiscal obligations are met in case of a (expected) permanent establishment.
8 Attention points: Hungarian company which employs staff Hungarian company which employs staff in the Netherlands (1) (Fictitious) permanent establishment for wage tax purposes! The Hungarian company is the formal employer and liable in Dutch law to make: salary deductions; withhold wage tax and possibly national insurance contributions submit wage tax declarations; possibly submit social security declarations. Dutch obligations depend on the tax law of the Netherlands, the tax treaty between the Netherlands and Hungary and on various international social security treaties (see next slides) If the Hungarian company refuses to make the payments, the Dutch tax authorities holds the recipient of the workers liable.
9 Attention points: Hungarian company which employs staff Hungarian company which employs staff in the Netherlands (2) Advise: it is important to determine whether you, as a foreign supplier, must pay (wage) tax/national insurance contributions, care insurance contributions and employed persons’ insurance scheme contributions in the Netherlands. The recipient will most likely wish to reduce his/her liability to a minimum. For example, by the following: screening you as a foreign supplierscreening paying the expected amount of payroll taxes into a G accountG account paying the expected amount of payroll taxes directly to the Tax and Customs Administrationpaying NEN certificate 4400-2 Be aware of a proposed change in the Dutch legislation: obligation to register at the Dutch chamber of commerce for (foreign) companies that employs staff in the Netherlands. A fine of EUR 12,000 per employee which increases!
10 Attention points: Hungarian company which employs staff Hungarian employee Tax treaty between Hungary – the Netherlands applicable Dependent personal services (article 15): ► Salaries, wages and other similar remuneration derived by a Hungarian in respect of employment shall be taxable in the Netherlands in case the employment is exercised in the Netherlands; ► This will not be the case if: - the Hungarian employee is present in the Netherlands for a period(s) not exceeding the aggregate 183 days a year; - the remuneration is paid by an employer who is not a resident of the Netherlands; - the remuneration is not borne by a PE or a fixed base of the Hungarian employer in the Netherlands. The exception does not apply in the situation of a Hungarian company which employs staff in the Netherlands. As of the first day the remuneration will be subject to Dutch wage tax!
11 Attention points In case of a permanent establishment the follow actions should be taken: Wage tax ► the Hungarian employee should obtain a Dutch tax identification number; ► the Hungarian employer should obtain a wage tax number; ► inform future principals about the registration; ► set up a wage tax administration; ► monthly pay slip for the employees; ► monthly wage tax returns; ► annual review for income tax return (for employees) Corporate income tax ► administration ► annual corporate income tax return
13 Opportunities Dutch favourable tax climate: ► wide tax treaty network reducing withholding taxes on dividends, interest and royalties; ► no statutory withholding tax on outgoing interest and royalty payments; ► favourable participation exemption regime; ► relatively low statutory corporate income tax rate of 25% (20% over the first EUR 200,000); ► favourable tax treatment for foreign employees with specific expertise (30% tax ruling); ► possibility of obtaining advance tax rulings from the Dutch tax authorities. IN SPECIAL: in certain circumstances the employer does not have to withhold social security contributions in the Netherlands! The Hungarian employee will be insured in Hungary if: - the employee has a contract of employment with the Hungarian employer; - the term of the posting does not exceed 24 months; and - the employer conducts business in Hungary as well (substance) A-1 certificate!
14 Opportunities Dutch wage tax in case of A-1 certificate: Gross-salary the NetherlandsWage tax (average rate) *:€ 1,500 16 ( 1.00%) 2,000 70 ( 3.50%) 2,500 124 ( 5.00%) 3,000 278 ( 9.00%) * based on monthly scheme Conclusion: low Dutch wage tax rates, in combination with low social security contributions in Hungary, lead to preferable salary costs for Hungarian employees.
16 How can we help you?! Support you with setting up your business in the Netherlands; Advise you on a tax efficient market entrance in the Netherlands; Take care of the necessary registrations (chamber of commerce, tax authorities); Provide bookkeeping services, preparing separate annual figures (balance sheet and profit & loss statement) Prepare and file the annual corporate income tax return, VAT-returns etc. Pay rolling (wage tax administration, pay slips, filing wage tax returns etc.)
17 Questions Doing business in the Netherlands mr. drs. E-J. (Ernst-Jan) de Roest tax manager Mobile : +31 (0) 6 11 88 10 41 Office : +31 (0) 88 277 2100 Ernst-Jan.deRoest@mazars.nl Druivenstraat 1 4816 KB Breda The Netherlands