Netherlands - Special considerations for short-term assignments

Special considerations for short-term assignments

Taxation of international executives

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For the purposes of this publication, a short-term assignment is defined as an assignment that lasts for less than one year.

Residency rules

Are there special residency considerations for short-term assignments?

The short-term assignee will probably be considered a non-resident of the Netherlands during the short-term assignment. This will ultimately depend on the concrete facts and circumstances surrounding the individual’s position.

Payroll considerations

Are there special payroll considerations for short-term assignments?

Based on the economic employer approach that the Dutch Supreme Court has adopted the short-term assignee could be subject to Dutch income tax as of day one (under certain conditions). The foreign employer will have a withholding obligation for Dutch wage tax purposes (under certain conditions, a Dutch group company can act as the withholding agent); the Dutch company can be held liable in case of under-withholding.

Taxable income

What income will be taxed during short-term assignments?

As a non-resident, the short-term assignee will be subject to Dutch income tax on Dutch-source income such as compensation attributable to services performed in the Netherlands. 

Additional considerations

Are there any additional considerations that should be considered before initiating a short-term assignment in the Netherlands?

Yes, social security considerations as well as visa and work permit considerations. Considerations should also be given to pension issues as well as labor law issues.

© 2016 KPMG Meijburg & Co., a Netherlands partnership and a member of the KPMG network of independent firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

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