WORKING REMOTE
When you employ an (international) employee who will be working for your company outside the Netherlands and may reside there, there are many important considerations to take into account. These include matters such as social security coverage, tax liability, the employment contract, and applicable labor laws. The following tips focus on social security and tax legislation. Tailored advice is crucial in every situation. Consult specialists to assist you in this process.
Cross border Information Point (Grensinfopunt, GIP)
When an employee lives in a different country than where they work or where the employment contract was signed, both the employee and the employer encounter additional rules and obligations. What needs to be arranged, what are the consequences of emigration or cross-border work? The Cross Border Information Point (GIP) specializes in cross-border work between the Netherlands, Belgium, and Germany and provides answers to these and other questions.
Consult GIP
GIP Eindhoven offers comprehensive information about (international) social security legislation, particularly regarding cross-border work between the Netherlands, Belgium, and Germany. They also provide information about the primary rules of tax legislation, EU employment conditions, and labor law. Both employers and (future) employees are welcome for advisory meetings, which can be conducted online or in person at GIP Eindhoven’s location at the Holland Expat Center South. Schedule an appointment via: GIP@eindhoven.nl
Cross-Border Working and Business Team (Team GWO)
Within Team GWO, the German and Dutch tax authorities collaborate to address questions related to income tax in the Netherlands or Germany, tax treaties concluded by the Netherlands or Germany with other countries, and wage taxes in cross-border situations. In addition, Dutch and German tax employees now also answer questions regarding Belgium or refer to the relevant Belgian authority. Team GWO is available on working days between 09:00 and 16:00 via the free phone number 0800-0241212.
The Social Insurance Bank (SVB), UWV, and GAK
SVB administers various laws and regulations concerning social security, such as AOW, ANW, AKW, while UWV manages employee insurances like WW and WIA. CAK administers WLZ and ZVW.
Holland Expat Center South Partners
Visit www.hollandexpatcenter.com/partners to find official partners specializing in labor law, immigration law, taxation, finance, and insurance.
One social insurance law applies at a time.
Example 1
If your employee lives in Belgium and works for you (also) in the Netherlands, the employee falls under Dutch social security legislation unless they work 25% or more of their total annual working time in Belgium.
Example 2
Starting from July 1, 2023, the framework agreement has come into effect. This agreement is designed for your employees who, for instance, live in Belgium or Germany and also ‘telework’ for you from their home in their resident country, such as Belgium or Germany. Employees teleworking and meeting the conditions can telework up to 50% of their total working time annually from the country where they reside without becoming socially insured in the resident country. This also applies to you as a Dutch employer. Note that this new legislation does not apply to the applicable tax legislation when individuals work in two countries.
Example 3
If your employee lives in the Netherlands, and the employer is based in the Netherlands, and they also work in other countries but at least 5% of their annual working hours in the Netherlands, this employee falls under Dutch social insurance law.
Example 4
Does your employee reside in the Netherlands and have both a Dutch and a Belgian employer? If the employee works 25% or more of their total working hours on Dutch territory for you, both employers fall under Dutch social security legislation. In this case, the Belgian employer must pay contributions in the Netherlands. If the resident country, the Netherlands, accounts for less than 25% of the working hours, the Dutch employee is socially insured in Belgium, and the Dutch employer must pay contributions in Belgium.
Where the employee is socially insured, you, as a Dutch employer, are obligated to pay social security premiums.
THREE AREAS
When working across borders, three areas need to be distinguished:
1. A pplicable employment conditions and labor law, including leave regulations and (collective labor agreement) employment conditions such as wages, and participation in a company pension fund.
2. Insurance legislation, including different rights and obligations. Only one social security legislation can apply.
3. Tax legislation and associated tax rules.
RESIDENCE AND WORKPLACE
If your employee works for you in one or more other EU countries, both you and the employee need to pay social security premiums in only one country. This depends on where the employee resides and in which country(s) they work. If your employee works for you and multiple employers in the EU, it depends on where your employee resides and how many hours they work for you and where.
When working across borders, always request an A1 certificate (= statement of applicable social security legislation). You can do this in the employee’s resident country, for instance, SVB, RSZ.be, or DRV.de.
Where should social security premiums be paid?
If you want to determine in which country you and your employee are liable for premiums, you can request this from the social security authority in the employee’s resident country and from SVB. Conduct research through the Social Insurance Institution of the country where your employee resides and SVB. A1 CERTIFICATE An A1 certificate (certificate of coverage) is proof that your employee and you, as the employer, are socially insured either in the Netherlands or in another country. The employee can obtain this certificate only if they work in an EU (European Union), EER (European Economic Area), or treaty country. If your employee temporarily works outside the Netherlands, they often remain insured in the Netherlands for social security. An A1 certificate is essential because without it, your employee may not be allowed to work in that country, and there might be penalties imposed by the authorities in the Netherlands or the respective work country overseeing this.
DISTINGUISH BETWEEN
Cross-border work, detachment, and working in two or more countries. This applies to the applicable social security legislation and tax legislation.
FAMILY AND CHILD BENEFITS
Where should the employee apply for them? In the country where they are socially insured.
PENSION
Consider old-age pension, company pension, or pension savings.
SICKNESS (COSTS) & DISABILITY
What happens in cases of (permanent) disability, sickness, or incapacity for work? Where is the employee insured for healthcare costs?
UNEMPLOYMENT
In the case of employee unemployment, a distinction is made between full unemployment and partial unemployment for eligibility for unemployment benefits in the EU.
HEALTH INSURANCE
Where someone is insured for healthcare costs depends on where the employee is socially insured.
SOCIAL SECURITY PREMIUMS
Carefully determine where the premiums need to be paid. Social security premiums must be paid in the country where both the employee and the employer are socially insured.
Legislation country of residence, Article 13 Paragraph 1 Sub-paragraph a Vo 883/2004
Employee works in two or more EU member states?
Employee works substantial hours in their country of residence?
Is employed by one or more employers in a member state?
Employer based outside the EU?
Legislation country of residence, Article 14 Paragraph 11 Subparagraph a Vo 987/2009
Legislation country employer(s) is/are based in, Article 13 Paragraph 1st and 2nd Sub-paragraph a Vo 883/2004
Employed by one or more employers based in two EU member states including country of residence?
Legislation country employer is based in, other than employee’s country of residence, Article 13 Paragraph 1 Sub-paragraph b the third Vo 883/2004
For more information, get in touch with the GIP for a consultation.
Tax Legislation
Employed by one or more employers based in at least two EU member states other than country of residence?
Legislation country of residence, Article 13 Paragraph 1 Sub-paragraph b the third Vo 883/2004
TAX LIABILITY
Conduct research to determine where the employee is liable for taxes. Take bilateral treaties into account.
TAXATION RIGHTS
How is the division of income tax in two countries? If there is a treaty, it determines where the income is taxed.
TAX FILING
Where does the employee file their tax returns? Most likely in the employee’s country of residence and in the country where the employee works.
COUNTRY OF RESIDENCE
The employee’s country of residence is crucial. The tax authorities consider factors such as where the employee works, where the family resides, where they are registered, where they are insured, etc. Actual circumstances are assessed, and the focus is on determining where the individual has the most enduring and intimate ties with that specific country.