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| CURRENT SECTION :: Overseas Guides | UK's most visited IT Contractor Site - 250k unique visitors March 2008 |
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Article written by Julia Lovett, ITECS. (2006) Introduction The Netherlands is home to a substantial expat community, many of whom were lured overseas by attractive tax allowances and interesting contract opportunities. With its vastly multicultural society and laid-back, liberal outlook, The Netherlands promises to be an interesting prospect for the UK contractor. SOFI numbers Everyone who wants to work in The Netherlands must first obtain a SOFI number. This is a tax-identification number and EU nationals can obtain one by simply visiting a local Tax Office with your passport. Taxation in The Netherlands Unlike most other European countries, the 183-day ruling cannot usually be applied in The Netherlands. This is because employers in the Netherlands usually require a local payroll for consultants, and furthermore the Authorities look to where the employment is taking place to assess where the tax liability occurs. In this way it is difficult for contractor to maintain paying taxes in their home country and avoid local payroll responsibilities. Chain Law legislation means that employers are prudent and often insist on local payrolls because of chain law that would deem them responsible for any tax or SS liabilities left behind by returning contractors. The 30% Expat Allowance Skilled expats coming to work in The Netherlands are usually entitled to the 30% ruling, which exempts the first 30% of your salary from taxation. This is a general allowance intended to cover any expenses incurred by the expat employee and is not dependent on actual expenditure. No receipts need to be provided. Other allowances As the 30% ruling is intended to cover all expenses, there are not very many additional tax breaks available to the expat employee. However, if you know where to look, there are a few additional loopholes that can be utilised. For example, if you buy property in The Netherlands and it is your primary residence, the interest payments on your mortgage are tax deductible. If you purchase a bicycle in The Netherlands, you could be entitled to a tax-break of more than €500. Social Security Contractors from the UK might be able to choose between paying Dutch social security or continuing to pay UK social security contributions during their assignment in The Netherlands. If your employer is able to obtain an E101 certificate then you might prefer to maintain your social security contributions in the UK. Tax Rebates in The Netherlands The tax year in The Netherlands runs from January to December. Employees in The Netherlands are taxed monthly amounts based on the assumption that they will be working the full 12 months. This means that if you begin a contract in the middle of 2006, you should be entitled to a tax rebate in 2007. Partial non-resident status When working on a temporary assignment in The Netherlands, there are several different options you can choose from when considering your tax status. Partial non-resident status means that you are only taxable on employment income or income from inside The Netherlands. Any non-employment income need not be declared to the Dutch tax authorities. However, those who choose to classify themselves as being partial non-residents are unable to claim certain benefits that full-Dutch residents are entitled to. Contractors, therefore, have the option of being residents rather than partial non-residents. Health Insurance On 1st January 2006, it became mandatory for everyone in The Netherlands to take out private health insurance. The minimum required coverage level is basic. However, you may choose to take out additional supplementary health insurance packages, such as dental or physiotherapy. It is a good idea to shop around as companies are currently offering very competitive rates. If your employer is able to obtain an E101 certificate for you during your assignment in The Netherlands, then you should be able to get a European Health Insurance Card (EHIC). This EHIC can be used instead of health insurance in The Netherlands. Simply produce your EHIC and your passport whenever you need to visit a doctor or hospital. The Netherlands has proven to be a welcoming country for expatriate workers, and will continue to be so as long as the items above remain on offer for the consultant negotiating a contract abroad. Be sure to contact a European accountant or management company in order to work through the intricacies of the Dutch tax system before embarking on a contract abroad. This should help to avoid any unnecessary pitfalls and could also provide more tax-efficient ways of working whilst contracting in the Netherlands. ITECS is a payroll management company assisting expatriates with their contracts abroad. To receive a personalised breakdown on how ITECS can help you, call +31 10 205 1660 (The Netherlands) +32 3 400 6363 (Belgium) or +44 208 863 2589 (UK). Previous Page
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