Liability for payroll tax and turnover tax

If you need temporary staff, then you can hire them via an intermediary such as a temporary employment or secondment agency. You can also subcontract work to a contractor/subcontractor. In both cases the intermediary or contractor/subcontractor must pay the payroll tax for these temporary staff. If this company fails to do so, the Dutch Tax and Customs Administration (Belastingdienst) may hold you liable. If you hire staff via an intermediary, the Tax and Customs Administration may also hold you liable for the turnover tax owed by this intermediary on the work carried out.

Who is liable?

The following companies are liable:

• companies in the Netherlands which subcontract work to the staff of a Dutch intermediary or contractor/subcontractor;
• companies in the Netherlands which subcontract work to the staff of a foreign intermediary or contactor/subcontractor;
• companies outside the Netherlands which have work carried out in the Netherlands by staff of a Dutch intermediary or contractor/subcontractor.

Foreign companies who hire Dutch staff to carry out work in foreign countries are not liable.

Avoiding liability

If you want to be certain that you will not be held liable for the payroll tax and turnover tax of your intermediary or contractor/subcontractor, there are two things you can do:

• pay the amount of these tax levies directly into a special Tax and Customs Administration account. The Tax and Customs Administration will maintain this account for your intermediary or contractor/subcontractor and will withdraw the amount owed in tax levies from this account;
• ask your intermediary or contractor/subcontractor to set up a blocked account (G account, g-rekening). You then pay the amount of the tax levies into this account and your intermediary or contractor/subcontractor transfers that amount to the Tax and Customs Administration or to the subcontractor as applicable.

Limiting liability

You can also take less strict measures in order to limit the risk of liability. These measures are:

• you ask your intermediary or contractor/subcontractor to apply to the Tax and Customs Administration for a payment history report (verklaring van betalingsgedrag). This report will show whether your intermediary or contractor/subcontractor had paid his payroll tax at the time when the report was compiled;
• you include a perpetual clause (kettingbeding) in the contract with your contractor/subcontractor, stating that your contractor/subcontractor is not allowed to further subcontract the work without your permission;
• you keep proper records, including records of the wages paid to the staff of your intermediary or contractor/subcontractor. If you are still held liable, the Tax and Customs Administration can more accurately fix the amount that you owe in payroll tax to ensure that you do not pay too much.