Working from home in another country than the employer

Due to the Corona outbreak, a number of new employees from abroad have not been able to physically come to the Netherlands. Some employers have decided to let them work from home until the situation improves. From an immigration perspective this is possible, as long as the employee has the nationality of the country where he/she works. However, this setting has an impact on the tax situation, always for the employee and sometimes even for the employer.

Working home from home country – impact on your employee’s tax situation

Generally spoken there will be an impact on the tax situation when your employee has a local contract in the Netherlands, but he/she works remotely from his/her home country. This is because he/she still lives there or just works from there. So even if the situation is temporary, it will have an impact on the tax situation. An employee pays wage tax in the country where he/she works.

Impact on tax situation for your company

Possible other implications for the company are:

  • Payroll obligation in the country from where your employee works from home. Work is performed in that country, this may mean that you will need to have a payroll there due to the applicable local law. This may also be applicable for employees who live in the Netherlands, but temporarily stay in their home country.
  • Possible risk of permanent establishment (more likely in specific positions, like a statutory director or when the working area includes the region of living – for example sales in that region or negotiations with companies in that region).
  • If the nationality of your employee is different than the country from where he/she works from home, an immigration procedure will probably be required.

Corona exemptions?

The risk of permanent establishment will most likely be waived under international law in the current situation, however we strongly advise to consult a tax specialist to know the exact impact on the tax situation as local laws may still be applicable. Ask them to advise you in each individual (country) situation on what will be the best solution. If you would like to know who you can best ask please contact us. We have good contacts with several tax advisers.

Other points of attention

Except for the impact on the tax situation you also have to consider the following:

  • Employment contract (think of illness, possible mandatory law in home country, employment conflict);
  • Health insurance;
  • Other social security such as pension.

We kindly ask our clients to keep us in the loop on your decisions, as these may have an impact again on immigration matters.

If you have any questions, please contact us via your regular contact person or via the contact page.

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