Salary Split

Salary Split

If an employee works in two or more countries, there may be fiscal benefits through the allocation of a separate salary in each country. In this case, the so-called “salary split” is used.

For a statutory director, a salary split appears at first sight easy to implement. It is often sufficient for the director to perform activities for the foreign company even if these take place in the Netherlands. However a laborious procedure must be followed, keeping an eye on the consequences for:

Pension credits;

Employment contracts;

Social security;

Deductible costs;

Personal situation.

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[International payroll]

Conditions

Simple division of the salary between different countries cannot be done just like that. The employee only qualifies for a salary split if he actually performs his activities in different countries, where the salary is taxed proportionally in the countries concerned. Because part of the work is performed for a foreign company, exemption applies for that part to avoid double taxation in the Netherlands. Each case must be assessed individually to see whether a salary split is beneficial. Arvode in collaboration with international tax advisors ensures correct processing of this complex matter.

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