The taxes of tele-working for a Netherlands company from another country
A Netherlands employee working from home across the border in Belgium doesn’t create a corporate tax problem on its own. The real risk begins the moment that workspace is considered to be controlled by the company. That happens if your Netherlands-based company requires them to work from home, or doesn’t keep a desk open for them back at headquarters. If your employee works at home for half the year or more, tax authorities can treat the house as a physical Permanent Establishment (PE). The host country claims a cut of company profits, while the business gets stuck with mandatory wage tax withholding (inhoudingsplicht) and retroactive audit penalties.
How the Rules Change Based on Employee Rank and Responsibility
The tax rules depend heavily on your employee’s actual authority. Staff who only handle internal work and never sign customer contracts rarely create serious tax problems. Even if their home workspace is taxed, the bill is limited to a small percentage of their salary cost.
That protection disappears for anyone who negotiates terms or signs deals with clients. Agreeing to contracts from home legally turns that residence into an official company branch, whether an office desk exists back at headquarters or not. Company directors face the greatest danger.
Making strategic business decisions from home allows foreign tax authorities to claim the entire business is run from that country, which puts all company profits on the line.
The Tax Liabilities That Apply to a Permanent Establishment
When a home office counts as an official company branch, the business must pay two Dutch taxes: tax on company profits and tax on the employee’s wages. The Dutch tax office taxes those local profits under standard corporate tax rates. That means 19% on the first €200,000 in profit, and 25.8% on every euro above that mark. Dutch inspectors only tax the slice of profit generated by that remote worker, leaving the rest of the company’s worldwide earnings alone. Officials calculate that slice from the worker’s actual responsibilities and daily duties under statutory profit allocation rules.
Moving those profits back to the main company bank account is free from any extra Dutch tax. On the payroll side, the employer can’t keep paying the worker through a foreign payroll. The business must register with the Dutch tax office as a withholding agent (inhoudingsplichtige) and deduct Dutch taxes and social insurance straight from each paycheck. Without tax treaty agreements between both countries, the business risks paying tax on the same money twice. Late discoveries also bring backdated tax bills with hefty fines and added interest.
Quick Tips to Regulate Working from Home and Mitigate Tax Risk
For our clients and assignees, this shift aims to enhance security and streamline border crossings in the long term. However, during this initial rollout phase, travellers should expect:
- Establish a voluntary telework policy. Working from home should remain an employee choice. Under official bilateral guidance in the Staatscourant, an employee’s house isn’t treated as company property when telework is driven by personal convenience.
- Provide open desk space at headquarters. Keeping accessible workstations on site shows that staff always have the realistic option to work at the office. When an employer downsizes so much that employees have nowhere to sit, tax inspectors are more likely to view remote work as required.
- Track remote work against the 50% threshold. Cross-border workers can log their working days on a shared company calendar. Staying below half the working year keeps the arrangement safely within bilateral treaty guidelines.
- Include domestic control clauses in employment contracts. Agreements should clarify that employees retain exclusive personal control over their home workspace, with no claim of access or disposal granted to the employer.
- Route commercial contracts and board decisions through the office. Keeping remote duties focused on internal support and routine administration prevents unexpected tax exposure. Signing customer deals and conducting board votes belong at the official corporate premises.