Beyond the ICT Permit: The Tax and Payroll Consequences You Shouldn’t Overlook
So, you’ve secured an Intra-Corporate Transferee (ICT) permit for an employee coming to the Netherlands. Case closed, right? Not quite. While the permit is a key requirement for non-EU/EEA employees transferring within the company, the process doesn’t stop there.
Many employers assume that since the employee remains formally employed abroad, there’s no need to worry about Dutch tax, social security, or payroll obligations. Unfortunately, that’s where things can go wrong. If these aspects are overlooked, you may face unexpected tax liabilities, compliance risks, and additional costs.
In this blog, we break down some key considerations for working with ICT permit holders in the Netherlands.
1. Income Tax
A crucial first step is determining whether the Netherlands has the right to tax the employee’s salary. This depends on how and where the employee works, whether there is a tax treaty in place between the Netherlands and the employees’ country of residence and if so, which specific provisions in the tax treaty apply.
Project-based work – If the employee is working on a specific project in the Netherlands, on behalf of the foreign employer, Dutch tax obligations may arise depending on the timeframe of physical presence in the Netherlands. In most of these cases (but definitely not always!), the 183-day rule should be considered. Check our earlier blog on this topic.
Economic employer principle – If the Dutch entity effectively directs and benefits from the employee’s work, the Netherlands may also claim taxation rights—even if the formal employer remains abroad.
A hidden risk: Permanent Establishment (PE)
In some cases, the presence of an ICT employee in the Netherlands could create a taxable presence (PE) for the foreign employer. This can lead to:
Dutch corporate income tax liability for the foreign employer.
Wage tax withholding obligations for the foreign employer.
Direct Dutch tax liability for the employee.
Ideally, you want to know this beforehand, to avoid unexpected surprises.
2. Social Security
Unlike transfers within the EU/EEA (where A1 certificates apply), social security for non-EU/EEA ICT employees depends on whether a social security treaty exists between the home country and the Netherlands.
✅ If a treaty applies, the employee may remain subject to social security in the home country. Proper documentation is required though; a so-called “Certificate of Coverage” (the non-EU/EEA version of the A1 certificate) should be applied for, to demonstrate that only foreign social security legislation applies to the employee.
❌ If no treaty applies, Dutch social security coverage applies in most cases. This means the employer will need to pay Dutch social security contributions, which can significantly increase employment costs. If the foreign social security legislation remains applicable as well, double social security coverage (which means double premiums!) is a possibility.
3. Payroll:
Many companies assume they can continue processing the employee’s salary exclusively through the home country payroll. This isn’t always an option though.
💡 Key considerations:
Dutch payroll obligations – If the Netherlands has taxation rights over the salary based on the economic employer principle or the presence of a Permanent Establishment, the foreign employer must withhold Dutch wage tax. Within group structures, it is possible to transfer the withholding obligation to a group Dutch entity. A request for this should be filed with the tax office though.
For employees who are taxable in the Netherlands based on the 183-day rule, no wage tax withholding obligation applies. There is one exception to this rule; if the employee is subject to Dutch social security legislation, a payroll is required as well.
30%-ruling – the 30%-ruling (a tax benefit for highly skilled expats), can only be processed through a Dutch payroll. So even if there is no obligation to withhold wage tax, it might still be beneficial to voluntarily include the employee in the Dutch payroll.
Split payroll – If an employee remains subject to foreign social security legislation, two payroll administrations (one in the Netherlands, one abroad) should be processed. This requires careful structuring and coordination to ensure compliance in both countries.
4. Foreign pension schemes
Many non-Dutch pension schemes are in principle not recognized under Dutch tax law. This can lead to two issues:
Employer pension contributions could be treated as taxable salary, increasing the employee’s tax burden.
The employee may not be able to accumulate tax-free pension rights in the Netherlands.
Some tax treaties include a non-discrimination provision, which allows equal fiscal treatment of pension schemes. In addition, a request should be filed with the tax office, as in most cases the tax office needs to confirm that the non-discrimination provision applies (and to which extent!).
5. Other Considerations
Unfortunately, we’re not done here: there are other important factors to keep in mind as well:
Work authorization limitations – An ICT permit only allows work in the Netherlands. If the employee also needs to work in other EU/EEA countries, additional permits or notifications may be required.
Dutch employment law – Even if the employment contract remains with the home entity, some Dutch employment law provisions (such as statutory paid leave requirements or working conditions) may apply.
Tax equalization vs. tax protection – Will the company compensate the employee for additional Dutch tax burdens? And how to deal with a lower tax burden? Employers should have a policy in place to avoid ad hoc negotiations.
Don’t Let Tax Be an Afterthought
Arranging an ICT permit is just the beginning. Employers often underestimate the tax, payroll, and social security obligations that come with transferring non-EU/EEA employees to the Netherlands. A lack of preparation can lead to unexpected costs, compliance risks, and administrative headaches.
To avoid surprises, make sure tax and payroll compliance is part of your transfer strategy from day one. Need guidance? We’re here to help!
