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Employees with foreign social insurance?

Do you have employees who have their social insurance abroad?

Make sure that you process the foreign social insurance contributions correctly in your payroll administration! Not all contributions are deductible for the employer or the employee.

In cross-border work situations, it is often difficult to determine in which country an employee should have social insurance and in which country/countries the wage tax/payroll tax is due. On our website you can read more about the international rules that apply in this context:

cross border assignement and international secondment

If international rules show that social insurance contributions must be paid in one country and wage tax in another, it is important to correctly process this in the payroll administration in the relevant countries. On one hand, to prevent fines or additional taxes; on the other hand, to ensure that no problems arise in the event of an employee’s sickness absence or termination of employment.

Determining the taxable wage is not always easy in such cross-border work situations. For example, in the case of an employee who pays tax in the Netherlands in connection with work in the Netherlands and has social insurance in another country. This is not a standard Dutch payrolling situation with regular deductible social insurance contributions. After all, it is not the Dutch social insurance contributions that apply; instead, it concerns a foreign social insurance system. In this case, the question is which social insurance contributions are and are not deductible for the employee, and which employer contributions are exempt or taxed. As social insurance is different in each country, this has to be checked for each individual country.

The Ministry of Finance has determined this in advance for many countries and published an updated overview of “tax qualification of foreign social insurance systems” in November 2020. This overview is available from https://www.rijksoverheid.nl (in Dutch only).

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Since 1972, Interfisc has offered international HR & Payroll solutions in the Netherlands, Belgium, Germany, France, the United Kingdom, and Italy. We do this from our offices in the Netherlands and Belgium, and with an international team of around 45 committed and caring employees. 

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