Dutch treatment foreign social security contributions – new Decree previous message

Dutch treatment foreign social security contributions – new Decree

The Netherlands is an open economy and many employees originally come from abroad. In many cases, employees continue to participate in a non-Dutch social security system. Furthermore, employers may (continue) to contribute to these foreign social security systems.

The key questions is whether premium contributions to the foreign social security scheme are tax deductible for the employee and/or qualify as taxable wage in the Netherlands.

Normally, these questions can only be answered by reviewing how the foreign social security has been structured in order to make a proper translation and assessment for Dutch tax purposes. In general, this analysis would require the review of the following components of the foreign social security system:

  • Local health care contributions
  • The state pension scheme
  • The local employee insurances
  • The general social insurance

In order to avoid complicated analyses, the Dutch Ministry of Finance has already provided its view on the social security systems in Germany, Belgium and Luxembourg. On January 5, 2016 the Dutch Ministry of Finance has expanded the number of countries significantly. The following countries are now (inter alia) covered: Austria, Australia, Brazil, Bulgaria, Canada, China, Cyprus, Denmark,  Egypt, Estonia, France, Germany, Greece, Iceland, India, Ireland, Italy, Japan, Latvia, Malta, Singapore, Switzerland, United Kingdom and the United States

Way forward

Participating in a social security system can have significant (future) implications. Sometimes you have the flexibility to opt for a specific social security system. In other situations there are specific guidelines due to the existence of social security treaties between the Netherlands and other countries. Furthermore, within the EU there is an ordinance providing detailed guidance.

If you would like to obtain guidance what is the best for you and your company, please do not hesitate to contact Guido van Asperen (guido.van.asperen@fisconti.nl or call +31 70 365 66 17)

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