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An individual’s liability to Dutch personal income tax is determined by residency status for tax purposes and the source of income derived by the individual. Personal income tax is levied at progressive rates on an individual’s taxable income for the calendar year, which is calculated by subtracting allowable deductions from the total assessable income. Extended business travelers can be taxed on employment income relating to their Dutch workdays. Dutch personal income tax can be triggered from the first working day in the Netherlands, since the Netherlands has adopted the economic employer approach in interpreting the term employer included in the dependent personal services paragraph in tax treaties.

Key message

A person who is a resident of the Netherlands is assessable on worldwide income. Non-residents are generally assessable on income derived directly or indirectly from Dutch sources.

Income tax

Liability for income tax

An individual’s liability to Dutch personal income tax is determined by residency status. A person can be a resident or a non-resident for Dutch tax purposes.

Based on Dutch tax law, tax residency is determined on the facts of each case. No minimal presence days’ threshold applies. The following facts are taken into account (not limitative):

  • the nature of the stay in the Netherlands
  • the length of stay
  • where the family resides
  • the individual’s center of social and economic interests
  • the individual’s intentions
  • whether or not the individual is registered in a municipal register
  • the place where bank accounts are held
  • the place where the individual’s assets are located
  • the terms of their employment etc.

The tax courts look at whether the individual has durable ties of a personal nature with the Netherlands. The term durable does not mean permanent; the closeness of the tie is more important. Ties of a personal nature exclude pure business considerations; personal circumstances, such as the maintenance of an abode, play a more defining role. Residence abroad does not, in itself, exclude the possibility of being considered a tax resident in the Netherlands. However, dual residence resulting in double taxation may be resolved under the terms of a particular tax treaty.

Business travelers are usually not considered a resident for Dutch tax purposes.

The general rule is that a person who is a resident of the Netherlands is assessable on worldwide income. Non-residents are generally assessable on income derived directly or indirectly from Dutch sources.

Employment income is generally treated as Dutch-sourced income to the extent attributable to duties physically performed in the Netherlands. In specific situations the scope may be extended.

Tax trigger points for employment income

In most tax treaties, the dependent personal services article states that the employee will be taxed in the employee’s home country/jurisdiction if the employee’s stay in the Netherlands does not exceed 183 days (in a calendar year or 12-month period). Other conditions are that the salary is not paid by, or on behalf of, a Dutch employer during that period, and that the employment costs should not be attributable to the foreign employer’s Dutch permanent establishment (PE) during the period of assignment based on transfer pricing regulations. Because the Netherlands has adopted the economic employer approach in interpreting the term employer, the employee could be taxable from their first working day in the Netherlands.

According to the Supreme Court’s ruling, for the application of the tax treaty, the employer:

  • has the authority to instruct the assignee; and
  • bears the benefits and the risks of the assignee’s employment; and
  • is responsible for the result of the assignee’s employment; and
  • bears the salary costs (direct or indirect through an internal recharge – this recharge should be specific and individually traceable).

There is, in principle, no threshold/minimum number of days that exempts the employee from the requirements to file and pay tax in the Netherlands. If certain conditions are met, in treaty situations, inter-company assignees can be exempt from Dutch income tax if they do not exceed 60 working days in the Netherlands per 12-month period even though the conditions for economic employer ship are met.

To the extent that the individual qualifies for relief in terms of the dependent personal services article of the applicable double tax treaty, there will be no tax liability.

Types of taxable income

For extended non-resident business travelers, only employment income attributable to Dutch duties is generally subject to Dutch income tax.

Extraterritorial costs (i.e. incremental expenses effectively connected with the stay outside the home country/jurisdiction) may be reimbursed tax-free.

A Dutch expatriate concession, the ’30 percent-ruling’, might be applicable depending on the circumstances of the individual.

Tax rates

Taxable income is subject to graduated tax rates ranging from 9.7 percent to 49.50 percent for both residents and non-residents.

Net taxable income
(euros (EUR))
Income tax
National insurance
EUR0–EUR34,712 9.7% 27.65% 37.35%
EUR34,712–EUR68,507 37.35%
Nil 37.35%
EUR68,507–higher 49,50% Nil 49,50%

Source: KPMG Meijburg & Co in The Netherlands, 2020.

If the extended business traveler is not covered by Dutch social security, for taxable income up to EUR34,712, the tax rate is 9.7 percent.

Social security

Liability for social security

The Dutch social security system comprises of the national insurance programs, the national healthcare insurance, and the employee insurance programs. Extended non-resident business travelers may be subject to Dutch social security under domestic legislation, but may then be exempt under application of European Union (EU) rules or bilateral totalization agreements. A certificate of coverage/A1 is then required.

Compliance obligations

Employees' compliance obligations

Tax returns are due by 1 May following the tax year-end, which is 31 December. An extension is available in most cases where a tax advisor is used. Tax returns must be filed by non-residents who earn Dutch-sourced income and are therefore liable for paying Dutch income tax.

Employers reporting and withholding requirements

If an extended business traveler’s employment income is subject to Dutch income tax, the employer generally has a withholding obligation.


Work permit / visa requirements

Prior to traveling to the Netherlands, extended business travelers should consider if they require an entry visa for the Netherlands, how long they are entitled to stay in the Netherlands and if a work permit may be required.

Immigration compliance

Citizens from EU/EEA countries/jurisdictions and Switzerland don’t require an entry visa, work permit or residence permit for the Netherlands. Only in case of a stay exceeding 4 months, they will need to register in the population register.

Citizens from outside the EU/EEA will need work permission for most of the work activities carried out in the Netherlands. There are a few work permit exemptions, however this needs to be assessed carefully in order to avoid high fines.

Often an entry visa is required as well, and in case of a stay exceeding 3 months they will also need to obtain a Dutch residence permit.

The category of visa/permits that should be applied for is determined based on the nationality and the nature and duration of the business traveler’s activities in the Netherlands.

Other immigration considerations

Extended business travelers in need of a Dutch tax and social security number ('BSN') may under conditions register in the population register as a 'non-resident'. Their BSN will be issued after successful registration.

Other issues

Double taxation treaties

The Netherlands has concluded tax treaties with more than 90 countries/jurisdictions.

Permanent establishment implications

There is the potential risk that a PE could be created as a result of extended business travel, but this would be dependent on the type of services performed and the level of authority the employee has. When the foreign employer has a PE in the Netherlands, the employee is subject to Dutch income tax if the remuneration is attributable to the PE. In this respect, it is not relevant whether or not the costs are actually borne by the PE.

Indirect taxes

The Netherlands has adopted the (pan-European) value-added tax (VAT) system. Goods and services will trigger a VAT tax rate of 0 percent, 9 percent, or 21 percent. Special rules apply if services or goods are provided or shipped internationally.

Transfer pricing

The Netherlands has a transfer pricing regime. A transfer pricing issue could arise to the extent that the employee is being paid by an entity in one jurisdiction but performing services for the benefit of the entity in another jurisdiction, in other words, a cross-border benefit is being provided. This would also be dependent on the nature and complexity of the services performed.

Local data privacy requirements

The Netherlands has data privacy laws.

Exchange control

The Netherlands does not restrict the flow of euros or other currency into or out of the country/jurisdiction, although certain reporting obligations are imposed to control tax evasion and money laundering.

Non-deductible costs for assignees

One of the most important non-deductible costs for assignees include contributions to non-Dutch pension funds. In principle, in case there is a wage tax withholding obligation in the Netherlands, a foreign pension scheme is considered as a non-qualifying scheme. As a result, employer’s contributions are considered taxable and employee’s contributions non-deductible. There are possibilities to obtain deductibility (a corresponding approval procedure). Contributions can then be deductible for a period of 60 months (120 months under certain tax treaties).


All information contained in this publication is summarized by Meijburg & Co, Tax Lawyers, the Dutch member firm affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity, based on the Dutch income tax act 2001, the wage tax act 1964 and subsequent amendments and resolutions; Resolution of the Ministry for Social Affairs and Employment of 6 November 2019, nr. 2019-0000154274; the Web site of the Dutch Revenue and the Web sites of the Dutch Social Security administrations SVB and UWV, the turnover tax act 1968, the Commentary to the OECD Model Tax Convention and Dutch case law, the Aliens act, order and circular 2000 and Aliens Employment Act and the Basic Registration Persons Act, the Web sites of the Government of the Netherlands and the Immigration and Naturalisation Service.

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