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Payrolling is an efficient, modern way of ensuring you’ll always have the right man for the right job while simultaneously minimizing labor costs. But what about your payroll tax liability? How do payrollers guarantee your tax obligations are properly covered? In the Netherlands, payrollers can opt to create a Dutch G-account. A Dutch G-account is a blocked account, which can only be used for the payment of payroll taxes. Instead of paying the total sum to the payroller, clients can pay their associated payroll taxes directly into a payroll provider’s Dutch G-account. If the correct procedures are followed, payroll clients are then insured from legal liability with regards to their payroll tax responsibilities.

How to set up a Dutch G-account

In order to set up a Dutch G-account, one must first create an agreement between three parties. In practice, a Dutch G-account is most often created by the supplier (i.e. payroller) or a service provider working for the supplier. After selecting a banking partner, the supplier petitions the Dutch Tax and Customs Agency for the right to set up a Dutch G-account. If the Tax Authority judges the proposal to be in accordance with Dutch Trade and Tax Law it will grant the supplier permission to set up an account. Funds in the Dutch G-account can then only be used to pay payroll taxes, and the payroller can use the account as proof that they accept tax liability for their services.

The advantages of a Dutch G-account

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 of the Dutch G-account 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 a Dutch G-account 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, WePayPeople ’ Dutch Umbrella Company can help.