So you moved to the Netherlands, but continue to work for your own company from abroad. This is a message that many tax advisors get nearly every day. Not a pleasant situation. Tax is Exciting tells you all the important details that you need to know if you find yourself in this scenario.
The first question to ask yourself is, “What type of company do you own?” If it is a so-called “transparent company”, and therefore not a legal entity, it cannot operate in another country while you are living somewhere else. You are the company. Hence you work in the Netherlands for your Dutch company.
In the event that your company is a legal entity, such as a US Inc or UK Ltd or German GmbH, then the company can only operate abroad while you live in the Netherlands if at least one of the directors on the board remains a tax resident in that other country. If you are the only director, however, then the company can be moved with you to the Netherlands.
Local director
If you want to move your company to the Netherlands without making a change to your tax residency status back home, then you can appoint a local director in the Netherlands to also make up part of your board. You can then be regarded, for Dutch tax purposes, as a walking permanent establishment of your foreign company.
For this to happen, you will need to register a branch of your company with the Dutch Chamber of Commerce (KvK), who will inform the Dutch tax authorities (Belastingdienst). The Belastingdienst will then issue you a corporate income tax number and a Value Added Tax (VAT) number. You must also obey Dutch rules with respect to the minimum salary of the local director / shareholder.
Transparent company
If you are operating a transparent company, then you will most likely need to register your company’s tax information in the Netherlands. That is easily done. We do encounter, especially with the US, some clients who prefer to pay their taxes locally. Further, it is possible to keep your transparent LLC up and running while being a tax resident of the Netherlands. However, you will need to make sure that there are no results or fiscal profits from your LLC in your country of origin.
Let's say that you have an LLC in the US and you move to the Netherlands and establish tax residency there. You should then create and send an invoice from your Dutch LLC to your US LLC in a way that there are no results or fiscal profits that are left behind in the US. The reasoning "My clients are in the USA hence I should pay US tax" is not supported by law or jurisprudence.
Branch registration
We mentioned above that you might need to register a branch of your company in the Netherlands. This could be avoided if you remove yourself from the position of director in the company. If you are not the director, then you are not considered the permanent establishment walking around and there is no need to set up a branch office in the Netherlands. This could save you a lot of paperwork. Keep in mind, however, that if you keep on acting like a director, the Belastingdienst might use material explanation of the situation to prove that you are the director.
Taxation
For a person moving to the Netherlands, Dutch tax applies on your worldwide income. Even if all of your income is earned outside of the Netherlands, it is still subject to Dutch taxes. Taxation is based on facts and circumstances. If you have travelled every day to work abroad, indeed, the other country can tax you. But if the work was done remotely in the Netherlands, Dutch taxes apply.
The Dutch taxes are related to your income, but there are also taxes on your worldwide assets. This makes the tax calculation of the Box 3 taxation more tricky.
It is advisable for individuals who move to the Netherlands to do some investigation up front about the potential impact of moving on your taxes.
Working remotely in the Netherlands
If you work remotely from the Netherlands for a company based abroad, you will still be taxed in the Netherlands. Some people will say that no Dutch tax needs to be paid because the work is only done remotely from the Netherlands while the company is based abroad. However, this is not true. If it were, there would be no Dutch companies left in the Netherlands, because they would have all moved to countries with lower tax rates.
The tax system is not based on where your business is formally registered, but on other facts and circumstances. And the fact is that, if you are residing and working in the Netherlands, then Dutch rules will apply.
Most people don’t find taxes exciting. Obviously, nobody is really excited if they find out after the fact that their move to the Netherlands may have tax implications for their company. Luckily, the team from Tax is Exciting do and they are happy to help you with your Dutch taxes. You can contact them via email at [email protected] or via phone at +31 (0) 205 207 991.