I am currently living and working in Amsterdam and over the past few months I have been approached by several contractors who appear to be have been deliberately mislead by their agencies and payroll companies. I created this article in order to highlight some of these problems.
Many UK agencies are pushing people toward certain payroll companies/solutions citing that this as the only choice. This is patently untrue and you should be able to arrange this for yourself, so long as your chosen company is completely legal and compliant with Dutch tax laws.
This is not as onerous as it first sounds and the Dutch Tax authorities can be very helpful and a great source of free information if you contact them via telephone, or the web.
http://www.belastingdienst.nl/english/
Your agency should also be able to ask the right questions regarding compliance, as under the "chain laws", they are as liable as you are in the event of a problem.
The next thing to realise is that your contract is with the PAYROLL PROVIDER and NOT directly with the agent, thus it is the PAYROLL PROVIDER that is going to be paying you, not the agent. It is VITAL that you understand this as in the event of problems you need to talk to the right people. The agency will bill the client gross; including their markup, and then transfer the money to the payroll provider who deduct their costs, calculate the taxes, and pay you net of tax.
Most skilled contractors are eligible for 30% tax relief, and it is the PAYROLL PROVIDER that is responsible for applying for this. This can take a couple of weeks and whilst being processed you will be paid without the this relief (like week-1 emergency codes in UK). The provider will hold this money and then give it you back as soon as the application is approved.
If you change payroll company they will try to tell you that you will lose your 30% and can never get it back. This is not true, you only lose it until your new company completes the re-application process.
At the end of each (tax) year the payroll company should provide a Jaaropgraaf (P60) which details what you have earned and the tax paid. Tax is calculated on the assumption that you have worked from Jan-Dec, and therefore if you have entered the country in March, then you could get 2/12's of your tax back.
Some payroll providers will attempt to withhold your Jaaropgraaf and charge huge amounts of money to calculate your year-end tax liability. If this happens demand your paperwork and take it to an independent NL tax adviser .
The final think to look very carefully at is the wording of your contract, DEMAND it in English, and read it thoroughly. Make sure that you understand their payslips and that they explain ALL the charges and deductions.
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