Netherlands: Board members’ payroll tax, social contribution withholdings

Netherlands: Board members’ payroll tax

Pending legislation in the Netherlands would, under certain circumstances, waive the rules with respect to withholding of payroll tax and social security contributions by principals on remuneration paid to “contracted parties.” This could also have implications for supervisory board members who currently perform their duties on the basis of an independent contractor status. Because the duties of a supervisory board member qualify as “deemed employment,” the change to the rules (effective 1 May 2016) would mean that principals must withhold and remit payroll tax and social security contributions on the remuneration paid to supervisory board members. However, the Deputy Minister of Finance has indicated that the “deemed employment” measures for supervisory board members would be repealed.

Related content

The Assessment of Employment Relationships Deregulation Act (Wet deregulering beoordeling arbeidsrelatie—“DBA Act”) was passed by the Upper House on 2 February 2016, and would replace the current Declaration of Independent Contractor Status (Verklaring arbeidsrelatie—“VAR”). 

Under the DBA Act, the withholding of payroll tax and social security contributions by principals on the remuneration paid to their contracted parties would be waived. The waiver would only apply if the agreement with the contracted party has been presented to the Dutch tax authorities for review, or if one of the model contracts on the website of the Dutch tax authorities has been used. By using the model contracts, the principal and the contracted party are assured that there is no withholding obligation for payroll tax and social security contributions purposes. 

The waiver would only apply as long as the activities are also actually performed in accordance with the approved (model) contract. The DBA Act limits itself solely to assessing whether a withholding obligation for payroll tax and social security contributions is embedded in the labor relationship.

 

Read a February 2016 report prepared by the KPMG member firm in the Netherlands: Introduction of Assessment of Employment Relationships Deregulation Act amends tax rules on supervisory board members

The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.

Connect with us

 

Request for proposal

 

Submit

KPMG's new digital platform

KPMG International has created a state of the art digital platform that enhances your experience, optimized to discover new and related content.