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