Is it possible for your business in the Netherlands to have employees working all over the world?

If your business employs expats who live and work in the Netherlands, this is likely a question you’ve considered at least once sometime last year. The inability to travel and state of uncertainty during the pandemic is difficult for everybody – but expats felt this impact harder than most.

That may be why your HR team is considering a policy that allows your expat employees to work from their home country.

So is it possible for expat employees to work remotely from abroad? The answer is yes — but not anywhere in the world and not for too long.

We’re a diverse team at Octagon – we have 18 different nationalities working for the in-house team alone, and even more employed with our clients. Throughout the pandemic, we helped dozens of cases for expat employees so they could work abroad without putting the company at risk.

This article is going to explain the process of setting up remote work and let you know what your HR team should keep in mind.

What to consider

Allowing an employee to work in another country is not always a straightforward case and should be considered carefully. Remote work is still on the rise, and most of us are still getting used to working in a remote environment.

When you implement a remote-abroad policy, your HR team should maintain a clear overview of all the immigration and taxation implications for your expat employees who work abroad. Beyond this, there are several aspects of working abroad your HR team should evaluate to determine whether long-term remote work abroad is right for the business.

Here’s what you should consider:

• Travel between the Netherlands and expat’s normal work country
• Providing a safe and healthy work environment for the employee abroad
• Upholding ‘work from home’ standards required by your Collective Labour Agreement (CAO) (if required)
• Insurance of the employee while they work abroad
• Regular and reliable communication with the abroad employee about time worked (such as illness, overtime, etc)
• Communication of the remote-abroad policy to other employees
• Observation of the ‘183 day rule’ (see below)

Long-term remote work can prove to be a worthwhile advantage — especially for your expat employees. But it’s important to understand all aspects of the employees’ case (see below) before making a decision. As a business, you could incur major fines or lose your IND sponsor status, whereas your employee may lose their residence status in the Netherlands altogether.

Understand the employees’ case to work abroad

First and most importantly, you need to understand how long the employee will be living abroad. The amount of time your employee spends abroad has tax and immigration implications. For example, expat employees who hold a Dutch residence permit cannot live abroad more days than in the Netherlands.

To get a clear picture of your employees’ case, make sure you know the answer to these questions:

• How long is the employee going to reside in another country?
• What type of visa or residence permit does the employee have?
• Which country is the employee going to reside?
• Does your employee own any assets or property in the Netherlands?
• Does the county where your employee wants to live have a tax treaty with the Netherlands?

Even though your employee has a Dutch employment contract, it is important to check the local law before starting the process, even if the employee is going away only for a few months. Failing to comply with the local country’s obligations is where most of the risk for your business occurs.

The ‘183-day’ rule explained

To avoid double-taxation of people, the Netherlands has signed tax treaties with many countries. Most of these tax treaties stipulate that the person pays income tax to the country where they are employed – regardless of their physical presence. However, these treaties also observe the “183-day rule” to determine which country taxes are paid.

In simple terms: The ‘183-day rule’ says that workers pay income tax to the country where they have worked more than 183 days out of the year. In other words, if your expat employee goes to work in a country with a signed tax treaty, they will pay tax to the Netherlands as long as their stay is less than 183 days. After 183 days, the other country will be able to levy tax on your employees’ income for the entire tax year.

You can find a recent list of all the countries the Netherlands has tax-treaties with here.

If no tax-treaty has been signed with the employee’s country of origin, you should check the Dutch regulation and check whether you must withhold the income taxes from your employee’s salary. If it is the case, you will have to withhold payroll tax from the wage and your employee will be liable for additional tax in their country. This payroll tax consists of wage tax, also national insurance contributions and employee insurance contributions.

The Dutch Tax Authority (Belastingdienst) has published a list (in Dutch) of all the countries that have a tax-treaty with the Netherlands and information about which wages should be withheld.

HR services for foreign expats abroad

It’s no secret that the trend of remote work is on the rise and is quickly becoming an expected accommodation offered at work. If you’re a Dutch employer who employs expats and foreign workers in the Netherlands, you can improve your employees’ experience and help them perform better by enabling them to work wherever they work best. Learn more about how our HR services can help your business arrange remote work from abroad here.