for companies posting employees abroad
In order to post employees abroad, your company may need to register a foreign branch.
• In the Netherlands, branches are registered with the Chamber of Commerce or Kamer van Koophandel (KvK), where the company is given a Dutch KvK number. Also, companies intending to pay taxes in the Netherlands need to register as a taxpayer with the Dutch Tax Inspectorate (Belastingsdienst);
• In Finland, the company’s branch is registered by Verohallinto. The company is assigned a Y-Tunnes (Business ID) number. Also, the company may need registration in the Finnish Prepayment Register. For companies that are not registered in the Prepayment Register, the customer can transfer 13% of the billed amount to the Finnish Tax Inspectorate as a guarantee that taxes will be paid;
• In Norway a branch of a foreign company is registered (Norwegian-registered foreign business or NUF) in the Norwegian company register Brønnøysundregistrene.
Which taxes (Income tax, Social security taxes) will be paid in a foreign country depends on the work, migration and tax law of Lithuania and the country receiving the posted workers, international legal acts and DTAA – double taxation avoidance agreements. It is important to predict the duration and specifics of activities planned to be carried out in a foreign country. It should be assessed whether the employee will not be sent to the employer’s permanent headquarters, whether the company’s activities in that country are considered as hiring employees (in other words, temporary employment or personnel hiring) and whether the employee being sent will not work in a foreign country for longer than 183 days within 12 months. All this affects tax obligations in the host country.
Seconded employees must be paid in accordance with both Lithuanian and foreign labor laws. It is necessary to pay attention to the requirements of the minimum wage and other components of the salary (daily allowances, travel, accommodation, meal expenses, etc.).
The wage required for posted workers in Lithuania is the minimum monthly wage, multiplied by a factor of 1.65 and at least 50 percent of the maximum amounts of daily allowances established in legal acts (List of maximum amounts of daily allowances). At the same time, the salary with all its components must also meet the requirements of the host country.
The personal income tax rate applied to each employee may be individual – it may depend on available documents, place of residence or other personal aspects:
• In the Netherlands, progressive taxes are applied, which depend on the amount of income earned by the employee. Moreover, the rates for third-country nationals are different from the tax rates for European Union citizens. Employees who do not have a BSN number or who have not signed a necessary application form are subject to a 52% tax rate.
• In Norway, taxes are applied to employees individually, depending on the tax card (Tax deduction card or Tax table) provided to them by the Norwegian Tax Inspectorate. Employees without a Norwegian D number are subject to a 50% tax rate.
A valid A1 certificate is required for every employee sent on a secondment to another country. Without this certificate, social security taxes should be paid in a host country.
It is also important to pay attention to whether additional taxes or contributions are mandatory in the host country.
In order to send third-country nationals on secondments to foreign countries, additional requirements arise. In addition to all other documents required for seconded European Union citizens, third-country workers must have a residence or work permit in the employer’s country (in Lithuania, a valid residence permit or a valid national D visa). In addition, such employees are subject to stricter requirements regarding the duration of working time abroad, so they may additionally need a work permit in the foreign country to which they are posted.
Foreign countries require the provide information about posted workers and contracts with foreign clients in the posting notifications systems of the host countries:
• In the Netherlands, the postedworkers.nl posting system is used;
• In Norway, information about assignments is provided in the Oppdrags- og arbeidsforhordsregisteret (OAR) system – forms RF1198 or RF1199 are filled out;
• In Belgium, assignments are registered in the Limosa system;
• In Germany, employees’ activities in the country must be reported to the German customs (Zoll) on the Meldeportal-Mindestlohn portal.
In Germany, companies engaged in construction activities may be required to be registered and pay contributions to Soka-Bau – the German holiday fund. Such companies may thus require a tax exemption certificate (Freistellungsbescheinigung, or in full – Freistellung vom Steuerabzug bei Bauleistungen nach § 48 b Abs. 1 Satz 1 EStG) from the German tax authorities.
In Norway, for workers working in the construction sector, the employer must order an HMS card – an employee identification card that shows the identity of the worker and his employer.
For foreign companies operating in the Netherlands, the client may require the company to open a tax bank account in a Dutch bank (G account). A G-account is a frozen account that you can only use for payroll tax or VAT payments to the Dutch tax authorities (Belastingsdienst) – this way the customer makes sure that the company really pays the taxes.
Have more questions?
We can provide consultations during an online meeting or live at a place convenient for you – we are flexible and can adapt to your needs.