As competing in today’s market requires ever more flexibility, an increasing number of businesses turn to payrolling to ensure they can react quickly to market fluctuations. In some cases, skilled workers are sourced from abroad via foreign payrollers. How can one safeguard one’s tax liability in those situations? In the Netherlands, a G-account is all you need. Using a G-account in the Netherlands guarantees the proper payment of payroll taxes. This helps make business dealings more transparent and ensures payroll clients are isolated from payroll tax liability. Labour and service costs are paid directly to the service provider’s account, while the associated payroll taxes are paid into the G-account in the Netherlands.
In the Netherlands, a G-account is the product of an agreement between three parties: the supplier of labour (the payroller), the bank where the account is opened and the Dutch tax authority. In order to set it up, the supplier must first formally petition the tax authority. The request will be granted if the tax authority deems the agreement between the supplier and the bank to be sound. Once it has been set up, funds within a G-account in the Netherlands can only be used for the payment of payroll taxes. This arrangement ensures taxes will always be paid in full. WePayPeople’s Dutch Umbrella Company therefore highly recommends the use of a G-account in the Netherlands.
Creating a Dutch G-account has a few marked advantages. Greatest among these is the fact that your clients will be insulated from tax liability if they follow the correct payment procedures. They will still be responsible for using the correct method of payment, but if the funds have been transferred to the Dutch G-account in accordance with Dutch tax legislation they will not be held liable if the payroller does not pay the payroll taxes. Another major advantage is its clear separation of (service) costs and payroll taxes. As funds in a Dutch G-account can never be used for purposes beyond payment of taxes, administrative errors are impossible. This makes it a useful administrative tool and a substantial benefit to customer relations. If you wish to set up such an account or have any additional questions, Dutch Umbrella Company can help.
In principle, the balance of your G-account in the Netherlands should remain frozen. This prevents accidental or deliberate withdrawals of funds that have been earmarked for the payment of payroll taxes. However, unique situations may arise in which the balance of a G-account in the Netherlands exceeds the tax liability attached to the account. In these situations, you can petition the tax authority to unfreeze the account. If the request is validated, you will be able to withdraw the difference from your G-account in the Netherlands. These funds can then be repurposed. WePayPeople’s Dutch Umbrella Company has extensive experience with these matters and can answer all your questions regarding the use of a G-account in the Netherlands.
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