The liability for the payment of Dutch payroll taxes

The withholding agent (the employer) bears the primary liability for the filing of the periodical wage tax returns and the payment of the salary taxes due to its employees.

Under certain conditions, the director(s) of the withholding agent can be held personally liable for the salary taxes due but not paid by the withholding agent. This is known as the director's liability.  In certain specific cases, certain third parties can also be held liable. This includes hirers of staff, via the hirer's liability or “Inleenaansprakelijkheid”, and sub-contractors in a chain, via the chain liability or “Ketenaansprakelijkheid. 

The director’s liability 

As a general safety net for the collection of salary taxes, the tax collection office can hold directors of the withholding agents liable if the so-called “notification of inability to pay” (in Dutch “melding betalingsonmacht”) is not filed timely. This notification must be filed by (at least one) authorized director by the withholding agent within two weeks after the due date of the Dutch wage tax. A similar but separate notification must be filed if there is also the inability to pay pension contributions due to a Sector Pension Fund. 

This potential liability applies to directors of the following legal entities:

• a Dutch corporation (like a “BV” or “NV”)
• an association (“vereniging”) that must file a Dutch corporate income tax return
• a foundation (“stichting”) that must file a Dutch corporate income tax return
• a foreign legal entity person who must file a corporate income tax return in the Netherlands

A standard form must be used for making the notification, and this form must be filed in hard copy. A separate form has to be filed with the Sector Pension Fund.    

The non-filing or late filing of the notification enables the tax collection office to hold the director(s) liable for the unpaid Dutch wage tax (or pension contributions) unless the director can exonerate him/herself. This exoneration can be granted if sufficient proof can be provided that he/ she is not to blame for the non-payment of the amounts due.  It should be noted that the foregoing provision exists next to the general director’s liability rules, which can make directors personally liable for the payment of certain taxes if the non-payment therefore can be attributed to acts of apparent bad management (“kennelijk onbehoorlijk bestuur”). 

The Chain Liability (“ketenaansprakelijkheid”)  

Any Dutch contractor who works with subcontractors can be held liable by the Dutch Tax Collection Office for unpaid Dutch salary taxes on behalf of employees of the engaged subcontractors. This is known as the chain liability scheme or “ketenaansprakelijkheid”.  

This liability can be avoided by the contractor by putting a part of the agreed contracting sum into the blocked bank account of the contractor/ sub-contractor, a so-called G-account. The funds transferred to this G-account can in the first instance only be used for the settlement of the salary tax due by the contractor/ sub-contractor on account of the employees involved.

For more detailed information about the Chain liability rules, and the use of a G-account please consult our publication https://www.tax-consultants-international.com/publications/the-liability-for-payroll-taxes-upon-subcontracting-in-the-netherlands-chain-liability about the chain liability scheme in the Netherlands.    

 The Hirer's Liability (“inleenaansprakelijkheid”)  

Every company that uses personnel from a third party which is the declared formal employer and withholding agent (like employment agencies or payrolling companies), can be held liable for salary taxes due but unpaid by this third party on account of the personnel which is hired. This applies to employees led by resident and non-resident third parties. 

The company that uses the personnel from a third party, can protect itself from a claim based on the “Hirer's Liability” rules by paying a (sufficient) part of the contract to a blocked bank account of the third party lending the personnel, the so-called G- account.  For more information about the G-account, and the procedure to establish a G-account, please consult our publication https://www.tax-consultants-international.com/publications/the-liability-for-dutch-payroll-taxes-upon-seconding-employees-in-the-netherlands-hirers-liability about the hirer's liability scheme in the Netherlands.