It’s an increasingly common situation: working remote for an employer abroad. For example, your partner was offered an awesome opportunity in the Netherlands, hence you moved with them to the Netherlands. Your employer agreed, and so you work remote for them. How does this work tax wise?
Common issues when working remotely
You moved to the Netherlands and continue to work for the employer abroad. The employer continues to pay you a local salary, and you pay local tax and social premiums. Everything looks fine and you decide to purchase a home with your partner in the Netherlands. Your combined salary should be sufficient for a modest family house. Then you learn at the mortgage advisor that you have no income that is useable for a mortgage. You cannot buy the house.
Similar problems occur when you have children, who go to a daycare centre. The Netherlands offers a tax credit, but this is only granted if both parents work. You do work but, as your income is not reported in the Netherlands, it does not count and so you receive no tax credit.
How to adapt the remote work in the Dutch system?
There are two possibilities to avoid such issues. One is setting up a remote Dutch payroll for the employer. That is the best solution, as you will be taxed as if you are a Dutch employee. Dutch social premiums apply, hence Dutch unemployment and disability benefits are available as for all Dutch employees. All costs are paid by the employer. Dutch labour law is also in place, even though a foreign employment contract was signed (maybe this needs updating!).
It may be that the foreign employer is reluctant to set up a Dutch payroll, because that will make them subject to Dutch rules and regulation. In that case, thee second-best option is to become a contractor for the formerly known employer. You should set up a Dutch one-man company and send invoices to the client. In international situations there are no rules as to the minimum number of clients your company should have.
The self-employed situation is the second-best solution, as you are not protected by Dutch labour law. You are not insured for unemployment and disability. Moreover, you will have to act as an entrepreneur, which means bookkeeping and filing tax returns; the costs for this fall to you. You are also personally liable for what you do. Furthermore, your former employer can easily terminate the working relationship.
Both the non-resident employer payroll and the self-employment situation can easily be set up. In both cases, the result is that you have income reported in the Netherlands, so your income counts towards a mortgage and you can use social facilities such as daycare tax credit.