Remote workers do not constitute a permanent establishment


According to a recent advance tax ruling with the Dutch tax office remote workers do not constitute a permanent establishment if their homes are not available to the employer and employees have no contracting authority.

A company was incorporated under the law of and actually established in a treaty country of the Netherlands outside the EU and served as the head office of an internationally operating group and was active in the service sector.  The company was subject to a corporate income tax in the treaty country.  In 2021 and 2022, the company had three employees who were residents of the Netherlands and who worked from their home in the Netherlands out of personal preference.  The company did not reimburse any costs related to this home workplace.  The company had no other employees in the Netherlands and did not conduct any other activities in the Netherlands.  The employees did not have the authority to enter into agreements themselves on behalf of the company.  In the context of an advance tax ruling, the company requested a position statement on the question of whether there was a permanent establishment or permanent representative for the purposes of corporate income tax in this case. The inspector has indicated that there is no permanent establishment, because the employees’ homes weren’t available to the company and the company therefore had no business equipment in the Netherlands.  Nor was there a permanent representative as the employees were not authorized to enter into contracts.


Jeffrey Beijnon , tax advisor Auren The Netherlands