Applying for an A1-declaration in the Netherlands

If your employee works in 2 or more countries, it is necessary to establish in which of these countries he or she is socially insured (read more about the main rules of social security when working across borders). For payroll purposes, you also need to provide substantiation in some cases in the form of an A1 declaration (also called certificate of coverage). This can be requested from the competent authority in the country where the employee is insured. For example, in the Netherlands this can be done at the Sociale Verzekeringsbank (SVB) and in Belgium at the Rijksdienst Sociale Zekerheid (RSZ).

As not only employees but also their employers have an interest in this document, many employers have an A1 certificate applied for by a service provider, who charges for it. Recently, the Dutch Tax Authorities ruled that in some cases this results in a private benefit for the employee, on which tax is due.

The Dutch Tax Administration’s position is as follows:

> The cost of applying for an A1 certificate and also its extension in the case of temporary secondment does not constitute wages for the employee concerned. This is because, in the case of secondment, it is up to the employer to set up its payroll correctly.

> However, the cost of an A1 certificate in the case of working in 2 or more countries is considered wages, as soon as an external adviser (such as Interfisc, for example) applies for the A1 certificate on behalf of the employee. The employee has the obligation to inform the SVB and by outsourcing this, the employee has a private benefit. Therefore, if the application for an A1 statement goes through Interfisc, the invoice value of the application is either

• taxed wages or 
• costs to be placed in the “free budget” 

> How this private benefit must be processed in the payroll administration is laid down in the Work-related Costs Regulations (WKR).

> The application for a work permit is not regarded as taxed wages.

> In case of a combined application for a residence permit and a work permit, the part relating to the residence permit is taxed as wages. You can also include this part in your free budget. The fees paid by the employer to the IND are also considered taxed wages.