[ESTABLISHING A BUSINESS ENTITY IN THE NETHERLANDS] 355 355
on withholding tax named Wet bronbelasting 2021 came into force on the 1 st of January 2021 and applies to interest or royalty payments by a company established in the Netherlands to an affiliate in a low-tax jurisdiction and in abuse situations. Dividends may be subject to Dutch dividend withholding tax. The Dutch withholding tax rate for dividend is 15%. As mentioned before: in case the participation exemption of the Corporate Income Tax Act is applicable no dividend withholding tax is due. A lower tax rate than 15% can be applicable in case the participation exemption does not apply while The Netherlands and the country of the receiving parent company do have a tax treaty. RESIDENCY AND MATERIAL VISA RESTRICTIONS Work permit/duty to inform The employer in principle must apply for a work permit or a single permit in the event that he wishes to have a non-EU citizen (hereinafter: ‘the foreigner’) perform work in the Netherlands. An exception is made for employers who are established outside of the Netherlands and who wish to have a foreigner perform work that is of a temporary nature. Companies who have an assignment agreement with a client established in the Netherlands (hereinafter ‘the service provider’) and who on that basis have their employees from third countries perform work in the Netherlands, are not required to apply for a work permit (which also includes the secondment of an employee), provided that the following conditions are met: • it must concern a foreigner who is entitled to reside in the country of establishment of the service provider and who is allowed to perform the relevant work there;
• the alien must be employed with an employer who is established outside of the Netherlands, which means that the enterprise has its seat outside of the Netherlands and carries out effective and genuine economic activities that are not purely marginal and ancillary; • the employer intends to temporarily provide services in the Netherlands (which implies that it performs economic activities for an economic consideration, other than paid employment); • the enterprise is not established in the Netherlands; should the enterprise be established in the Netherlands, and in another member state of the European Union as well, the exemption scheme applies in the event that the foreigner is temporarily performing work in the Netherlands from the foreign branch within the scope of cross-border services. Before the temporary provision of services by a foreigner in the Netherlands commences, the employer must inform the UWV (Employee Insurance Agency) thereof in writing and it must submit a statement and documents of proof (the duty to inform). This duty to inform applies each time the employee involved travels to the Netherlands. The employer must submit documents of proof showing that the foreigner is entitled to reside in the country of establishment of the employer and that he has been granted permission to perform work there. Moreover, a fully filled out E101 Declaration that is valid for the relevant work must be submitted, stating that the employee will carry out the activities in the Netherlands, or a truthful and written declaration made by the employer, drawn up in a form issued by UWV for that purpose, mentioning the name and the
ILN Corporate Group – Establishing a Business Entity Series
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