Exemption income tax return for expats

On March 21, 2016 by Dutch Umbrella Company

Under certain conditions employers can equate the withheld wage taxes with the income tax rates in the payroll accounting. For example, if net wages are agreed with a foreign employee, the employers may use this method to settle the correct amount quickly and definitively with an additional wage run. The main advantage is that employees do not have to file their own tax returns.

This simplified method applies to:

  • an employee living abroad and working in the Netherlands and who only has income from employment in the Netherlands;
  • an employee recruited from another country or posted abroad from another country to the Netherlands.

If such an employee lives in the Netherlands and makes use of the 30% scheme, they may opt for the so-called partial non-resident tax liability. In such a case the employee will be treated as a non-resident for the levying of income tax in box 2 and 3. As a result, taxation in the Netherlands may often be limited to the wage paid.

To apply this simplified method, arrangements need to be made with the Tax and Customs Administration. The tax inspector’s approval must be laid down in a withholding taxes agreement. WePayPeople may assist in obtaining this approval and assist with the correct processing in the payroll accounting.

To obtain approval the following conditions must be fulfilled in any case:

  • The employee only has an income from the employer and no other income in the Netherlands;
  • The employer can perform the complete payroll calculations and has the necessary expertise – internally or externally – available;
  • Salary software is used to execute the payroll accounting completely and in time;
  • The employer is responsible for the complete and correct processing of the payroll accounting and may be called to account by the tax authorities;
  • The employee declares in writing that they agree with this method and this declaration is kept with the payroll accounting.


Would you like to know more aboute the above mentioned information? Contact our Expat Payroll Desk on +3120 820 1560 and we or our Tax partner can assist you.