What's with this Dutch 30% rule?

**expat** · 5 November 2008, 11:09

Originally posted by d000hg View Post

This high-rate gig I'm looking at is based in Holland. I've done a bit of searching here and got as far as being confused... it sounds like my Ltd is useless and I will be paid as an individual whether I like it or not, and then there is some weird rule about 30%...

I feel my Ltd is a 'real' company. It works with multiple clients at the same time and on a business-business footing with companies in the US and elsewhere.

Can anyone spell it out in simple terms? For instance what does this 30% mean... that I pay tax in Holland and not in the UK? That I actually get to keep 70% of what I'm paid?

I don't consider that I would be living in Holland. At the least I would be in the UK every weekend and there is also possibility for remote working.

Is it likely that regardless of all this, an agency will insist on whatever they normally do?

1. NL will take it that you personally are working in Holland. That gets you taxed on Dutch income. The question of whether you live, or are tax-resident, in NL is irrelevant to that, it is only relevant to the question of whether you are liable for dutch tax on worldwide income.
2. The 30% rule, designed to obviate the fact that taxes in NL are so high as to scare off people like you, means that 30% of your income is paid to you free of tax. Then you pay Dutch tax on the rest, and you can't claim expenses (except a few local ones).
Note that this 30% dispensation has to be applied for, before starting work, by the employer. It may take a few months to be approved so don't count on spending it right away.
3. This 30% is a feature of Dutch tax law: it means nothing to Hector. So HMRC will look at your total income including Dutch income (not reduced by any 30%), work out the tax on that, then give you a credit for any tax actually paid to other treaty states like NL.
It sounds like the Dutch give you a break and Hector claws it right back, which is effectively what happens; however the Dutch tax even after the 30% allowance is so high that you should find that you have paid almost enough already anyway.
4. I'd guess that agencies insisting on their normal way of working is about a 100-percenter.

**d000hg** · 5 November 2008, 11:18

So if I do a contract in Holland, does my Ltd just sit gathering dust? Or do I still get paid into the business account?

**Moscow Mule** · 5 November 2008, 11:18

Don't take this as gospel, but working for your UK limited using a UK agency can help you to "fly under the radar" of the Dutch authorities.

I wouldn't try to do it for long (less than 6 months), or leave a footprint in Holland - by that I mean don't rent a flat or anything similar that requires your personal details on a contract.

Whether your end client is happy to do that is another matter entirely...

**d000hg** · 5 November 2008, 11:38

I guess the big question is if all this messing about actually ends up costing you more or less in tax than doing the same contract back in the UK would?

**expat** · 5 November 2008, 11:52

Originally posted by d000hg View Post

So if I do a contract in Holland, does my Ltd just sit gathering dust? Or do I still get paid into the business account?

Moscow Mule is right in practice, if the agency and client will allow it.

Your Ltd does not gather dust: it still has a mobile phone

But no, you wouldn't want to put your money through it, considering that it's already taxed by the time you get it.

**BlasterBates** · 5 November 2008, 11:52

Originally posted by d000hg View Post

So if I do a contract in Holland, does my Ltd just sit gathering dust? Or do I still get paid into the business account?

You can register a branch of your Ltd in Holland if you want. This branch then needs to be keep accounts accoridng to Dutch tax regulations, and will pay Dutch tax. You need to then probably employ yourself as a Dutch employee of the branch. You can still be an employee of the UK branch at the same time.

If you were to do this it would probably be cleaner to set up a second Ltd which although registered in the UK is effectively only tax resident in Holland. Many German companies set themselves up as UK registered Ltd companies but are actually German companies, only liable for tax in Germany.

If the contract is less than 6 months you can theoretically run the whole thing through your UK Ltd company. Though because this rule is often abused some agencies maybe wary of doing it.

**DS23** · 5 November 2008, 12:29

does the end client have a uk office? you might be able to work through them in your ltd guise. i did this once and it worked quite well.

you can either have the 30% or get expenses paid - another reason why i prefer to load up the rate and make it all-in but (without making it explicit!) when working in the netherlands

**oracleslave** · 5 November 2008, 12:32

Originally posted by DS23 View Post

does the end client have a uk office? you might be able to work through them in your ltd guise. i did this once and it worked quite well.

WHS

**Turion** · 5 November 2008, 15:54

As already said the taxes are high even with the 30% discount and there are a host of other social costs still to pay including sickness insurance. If you're travelling every week you will have many costs as well and these will have to be met from your net pay as there are no allowances. On a Mon-Fri gig you can go 9 months without exceeding the limit and work legally with a ltd co. The biggest problem is finding an agency that allows it. Most clients do not mind either way.

What's with this Dutch 30% rule?