taxation

Supreme Court of the Netherlands qualifies travel expenses extraterritorial
Expatise Knowledge Centre | 09-04-2010

Today the Supreme Court rendered judgement on the travelling expenses of employees commuting between England and the Netherlands. Since the necessity of these travels is related to the employment in the Netherlands, the expenses are qualified as so-called extraterritorial expenses and therefor already covered by the applicable 30% . The expenses payments received from the employer are not exempted from tax.
Hoge Raad, 9 april 2010, nr. 09/01778

Decree of the State Secretary for Finance regarding economic employership published
expatise | 20-01-2010

Today the Decree on the taxation of the economic employer has been published in the Staatscourant.
Click here to download the official version (Dutch only).

Samenvatting

Op 20 januari publiceerde de Staatscourant het nieuwe besluit over de verdragstoepassing bij kortdurende uitzendingen.

Het besluit is van belang bij uitzendingen die korter dan 183 dagen duren en waarbij in het land waarnaar uitgezonden wordt (het werkland) geen vaste inrichting is.

Verder moet sprake zijn van een werknemer die in het land waarnaar hij wordt uitgezonden geen formele dienstbetrekking heeft, maar in formele dienstbetrekking blijft bij de uitzendende vennootschap.

Het besluit geeft aan wanneer de belastingheffing over het arbeidsinkomen is belast in het werkland. De heffing komt (voor zover relevant in concernsituaties) aan het werkland toe als degene waarvoor de werkzaamheden worden verricht:

met betrekking tot de werkzaamheden het gezag over de werknemer uitoefent;
de voordelen, nadelen en risico’s van die werkzaamheden draagt.

Deze zogenaamde materiële werkgever moet dus de opdrachtgever in het werkland zijn.

Ad. 1. De werknemer moet zich concreet voegen naar de aanwijzingen van de inlenende partij (de werknemer werkt regulier mee aan de normale bedrijfsactiviteiten), de inlenende partij is verantwoordelijk voor het resultaat van de werkzaamheden (bijv. aansprakelijkheid bij fouten). Er is geen sprake van gezag als de werknemer werkzaamheden verricht die geen geïntegreerd onderdeel vormen van de normale bedrijfsactiviteiten (bijv. verzorgen trainingen, implementatie marketingactiviteiten, financiële audits etc.).

Ad. 2. De loonkosten moeten geïndividualiseerd worden doorbelast.

Het bovenstaande vergt dus een zeer feitelijke beoordeling van de situatie.

Voor de praktijk is in het besluit voor concernuitzendingen nog een praktische bewijsregel opgenomen. Als binnen concernverband de werknemer minder dan 60 dagen per periode van 12 maanden werkt in een ander land, dan wordt de heffing geacht te blijven in het land van waaruit de werknemer wordt uitgezonden.

In anticipation of the decree of the State Secretary for Finance on the application of the Supreme Court's case law on economic employership, the Tax Administration has ruled in several cases
expatise | 05-01-2010

In December 2006 the Dutch Supreme Court rendered a series of important judgments regarding the interpretation of employership. It was decided that not only the relationship based on an employment contract constitutes fiscal employership, but also a subordinated relationship with a so-called economic employer (the one that is allowed to give instructions, bears the responsibility for failures and damages, to whom the employee is answerabel, etc.).

In order to clarify the interpretation of the term economic employer and to allow practical application of this case law, the State Secretary for Finance announced the issueing of a decree.

In the meantime however employers face a dramatic increase of the administrative burden, especially in case of short term international assignments.

Breaking news:

We've been told by several companies that the Dutch tax office has ruled assignments of less than 60 days within a 12-month period do not constitute actual employment. This means the Netherlands will not levy wage tax over the employee's salary.

This is an important clarification of the term economic employment in an international context and will cut the administrative burden on companies employing short-term expatriate staff.

To obtain this ruling, please consult your tax advisor or file an application to the Tax Administration.

Supreme Court 4 December 2009: calculation of wage tax and social security contributions in international situations
IFK | 22 December 2009

The Supreme Court of the Netherlands rendered judgment on 4 December 2009 concerning the calculation of wage tax/social security contributions in international situations.

What was the matter?
An employer in the Netherlands hired an employee from the United States. Over a certain period this employee worked in the Netherlands for 55 days. All in all he worked for 97 days during that period. The employee’s net wages had been agreed upon. The employer had calculated the wages and the wage tax/social security contributions as follows: the total of net wages multiplied by 55/97. Then, the employer had proceeded to gross up the net income.

The Tax Administration did not agree and calculated wage tax/social security contributions as follows: the total amount of net wages was grossed up first, after which the wage tax/social security contributions were calculated over 55/97 of the gross wages.

The Supreme Court put the tax payer in the right.

What does this mean in practice?
In practice this judgment may imply a considerable saving on wage tax/social security contributions, as demonstrated by the following example:

an employee earns a total net amount of € 2.000. He/she is employed in the Netherlands for 50%. His/her Dutch net wages then amount to € 1.000 and the Dutch gross wages amount to € 1.160,41. The wage tax/social security contributions to be retained amount to € 160, 41.

In case of application of the Tax Administration method, an amount of € 2.000 should first be grossed up. This would result in gross wages of € 2.858,33.

50 % of these Dutch gross wages would amount to € 1.429,16, and the wage tax/social security contributions to € 221, 41.

In this example, the judgment brings about savings of approximately € 60, 00 per month per employee!

Conclusion
This judgment has brought an end to long discussions with the Tax Administration. In case you employ personnel whom this might concern, please check whether the correct calculating method has been applied. You might be saving money.

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	taxation Supreme Court of the Netherlands qualifies travel expenses extraterritorial Expatise Knowledge Centre \| 09-04-2010 Today the Supreme Court rendered judgement on the travelling expenses of employees commuting between England and the Netherlands. Since the necessity of these travels is related to the employment in the Netherlands, the expenses are qualified as so-called extraterritorial expenses and therefor already covered by the applicable 30% . The expenses payments received from the employer are not exempted from tax. Hoge Raad, 9 april 2010, nr. 09/01778 Decree of the State Secretary for Finance regarding economic employership published expatise \| 20-01-2010 Today the Decree on the taxation of the economic employer has been published in the Staatscourant. Click here to download the official version (Dutch only). Samenvatting Op 20 januari publiceerde de Staatscourant het nieuwe besluit over de verdragstoepassing bij kortdurende uitzendingen. Het besluit is van belang bij uitzendingen die korter dan 183 dagen duren en waarbij in het land waarnaar uitgezonden wordt (het werkland) geen vaste inrichting is. Verder moet sprake zijn van een werknemer die in het land waarnaar hij wordt uitgezonden geen formele dienstbetrekking heeft, maar in formele dienstbetrekking blijft bij de uitzendende vennootschap. Het besluit geeft aan wanneer de belastingheffing over het arbeidsinkomen is belast in het werkland. De heffing komt (voor zover relevant in concernsituaties) aan het werkland toe als degene waarvoor de werkzaamheden worden verricht: met betrekking tot de werkzaamheden het gezag over de werknemer uitoefent; de voordelen, nadelen en risico’s van die werkzaamheden draagt. Deze zogenaamde materiële werkgever moet dus de opdrachtgever in het werkland zijn. Ad. 1. De werknemer moet zich concreet voegen naar de aanwijzingen van de inlenende partij (de werknemer werkt regulier mee aan de normale bedrijfsactiviteiten), de inlenende partij is verantwoordelijk voor het resultaat van de werkzaamheden (bijv. aansprakelijkheid bij fouten). Er is geen sprake van gezag als de werknemer werkzaamheden verricht die geen geïntegreerd onderdeel vormen van de normale bedrijfsactiviteiten (bijv. verzorgen trainingen, implementatie marketingactiviteiten, financiële audits etc.). Ad. 2. De loonkosten moeten geïndividualiseerd worden doorbelast. Het bovenstaande vergt dus een zeer feitelijke beoordeling van de situatie. Voor de praktijk is in het besluit voor concernuitzendingen nog een praktische bewijsregel opgenomen. Als binnen concernverband de werknemer minder dan 60 dagen per periode van 12 maanden werkt in een ander land, dan wordt de heffing geacht te blijven in het land van waaruit de werknemer wordt uitgezonden. In anticipation of the decree of the State Secretary for Finance on the application of the Supreme Court's case law on economic employership, the Tax Administration has ruled in several cases expatise \| 05-01-2010 In December 2006 the Dutch Supreme Court rendered a series of important judgments regarding the interpretation of employership. It was decided that not only the relationship based on an employment contract constitutes fiscal employership, but also a subordinated relationship with a so-called economic employer (the one that is allowed to give instructions, bears the responsibility for failures and damages, to whom the employee is answerabel, etc.). In order to clarify the interpretation of the term economic employer and to allow practical application of this case law, the State Secretary for Finance announced the issueing of a decree. In the meantime however employers face a dramatic increase of the administrative burden, especially in case of short term international assignments. Breaking news: We've been told by several companies that the Dutch tax office has ruled assignments of less than 60 days within a 12-month period do not constitute actual employment. This means the Netherlands will not levy wage tax over the employee's salary. This is an important clarification of the term economic employment in an international context and will cut the administrative burden on companies employing short-term expatriate staff. To obtain this ruling, please consult your tax advisor or file an application to the Tax Administration. Supreme Court 4 December 2009: calculation of wage tax and social security contributions in international situations IFK \| 22 December 2009 The Supreme Court of the Netherlands rendered judgment on 4 December 2009 concerning the calculation of wage tax/social security contributions in international situations. What was the matter? An employer in the Netherlands hired an employee from the United States. Over a certain period this employee worked in the Netherlands for 55 days. All in all he worked for 97 days during that period. The employee’s net wages had been agreed upon. The employer had calculated the wages and the wage tax/social security contributions as follows: the total of net wages multiplied by 55/97. Then, the employer had proceeded to gross up the net income. The Tax Administration did not agree and calculated wage tax/social security contributions as follows: the total amount of net wages was grossed up first, after which the wage tax/social security contributions were calculated over 55/97 of the gross wages. The Supreme Court put the tax payer in the right. What does this mean in practice? In practice this judgment may imply a considerable saving on wage tax/social security contributions, as demonstrated by the following example: an employee earns a total net amount of € 2.000. He/she is employed in the Netherlands for 50%. His/her Dutch net wages then amount to € 1.000 and the Dutch gross wages amount to € 1.160,41. The wage tax/social security contributions to be retained amount to € 160, 41. In case of application of the Tax Administration method, an amount of € 2.000 should first be grossed up. This would result in gross wages of € 2.858,33. 50 % of these Dutch gross wages would amount to € 1.429,16, and the wage tax/social security contributions to € 221, 41. In this example, the judgment brings about savings of approximately € 60, 00 per month per employee! Conclusion This judgment has brought an end to long discussions with the Tax Administration. In case you employ personnel whom this might concern, please check whether the correct calculating method has been applied. You might be saving money.