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Relocating, Moving to Netherlands

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tj_al
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Relocating, Moving to Netherlands

Post by tj_al » Mon, 15 Feb 2016 4:34 pm

Hi guys,

Thanks for the previous help when I posted about moving to Thailand last year. Things have been well and now I have been facing a prospect of moving to the Netherlands.

TL:DR
Going there on a 18-month sabbatical this July actually, but a Singaporean company (a former employer) offered a remote role, so I thought, "Why not make some money on the side?". It is their first time offering such role and it is my first time too.

Basically I will live in Netherlands but not employed by any Dutch establishment, nor servicing any Dutch clients. I will serve that Singaporean company and for clients in Africa, Middle East and Asia Pacific, so NL isn't in the clientele. This company offers to check for tax and CPF matters (because I am a PR). My own visa in Netherlands is not an issue, and so are accommodation and health benefits there. I will be paid for quarterly flights to Singapore HQ and for incidental flights to their branch offices in Africa, Middle East and Asia. So no problem for this either.

They have not sure if they would need me in part-time remote role or full-time remote role. I will be dealing with technical, commercial and marketing. By the way, if this doesn't work out (due to potential tax issues or remuneration), I do not mind to forego this arrangement and remain in full sabbatical.

If I want to bill them by hourly rate, how do they quantify the number of hours spent on tasks/projects? My work will be both project- and routine-based, so I have no experience to quantify this. I am always curious by how people do this in this scenario.

I have read about Dutch tax laws and Singaporean tax laws. I know if I am in Singapore for less than 183 days there, I have to pay flat non-resident rate (which I am fine I guess). But if international tax laws in the picture (which I have yet to fully understand), not sure how to go about with this. Still reading up on Dutch tax laws (even though I know this company would get the info for me - thought would be good to know for self).

And CPF. Not living in Singapore would mean that there is no need for CPF contribution from both employer/employee, right? I can do voluntary contribution because I have plans to return to Singapore at the end of my 18-month sabbatical. How much is acceptable (to keep the PR by time of renewal)? Tried reading the threads by other PRs who are posted on overseas assignment but I seem to be unable to get firm answers.

Please correct me if I am wrong. Thank you for your time.

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Re: Relocating, Moving to Netherlands

Post by BBCWatcher » Mon, 15 Feb 2016 6:00 pm

Following your plan means you would, in all likelihood, be a tax resident of the Netherlands. Were you aware of that? There's of course nothing wrong with being a tax resident of the Netherlands. Millions of people are.

Singapore PRs (and citizens) must make Singapore MediShield Life contributions for the whole household regardless of where they reside in the world. They can make those contributions from existing Medisave funds until such funds are exhausted, then they must make those contributions from personal funds thereafter. Low income waivers and subsidies are available to those who qualify, but those are the only exceptions. Currently (as I write this) unsubsidized MediShield Life premiums range from S$130 to $1530 per year per individual; the variation depends on the individual's age. The government currently plans to hold these premiums (taxes) constant until October 31, 2020.

You cannot "buy" a re-entry permit (REP) renewal with voluntary CPF contributions. Forget that idea. You can, however, maintain Singapore PR status indefinitely provided that you're not caught outside Singapore without a current REP and that the government doesn't revoke your PR status for some quite rare reason, e.g. something criminal. A REP is exactly that: permission to re-enter Singapore. If you're never leaving Singapore, you don't actually need one. You qualify for a REP based on being an actual resident of Singapore, in simple terms, and per ICA's assessment of your individual circumstances when you attempt to renew your REP. If you're 18 months in the Netherlands and otherwise resident in (and physically present in) Singapore, and generally economically active in Singapore, that's probably fine, especially if that 18 month period is entirely contained inside the validity period of your REP. If you're 18 months in Singapore, then 24 in Botswana, then 8 in Mexico.... well, you're not a de facto resident of Singapore, are you? Thailand then the Netherlands, well....

To summarize, Singapore PR is intended and designed for genuine residents of Singapore, not for loosely or never attached individuals.

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Re: Relocating, Moving to Netherlands

Post by x9200 » Mon, 15 Feb 2016 9:49 pm

OP, could you please explain if possible why you consider your Dutch (Schengen?) visa not an issue? Assuming you are not an EU citizen, what sort of arrangement would allow you to stay there for 18 month? Are you married to somebody with the right to stay in the Netherlands (but not an EU citizen neither)?

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Re: Relocating, Moving to Netherlands

Post by tj_al » Mon, 15 Feb 2016 10:00 pm

BBCWatcher wrote:Following your plan means you would, in all likelihood, be a tax resident of the Netherlands. Were you aware of that? There's of course nothing wrong with being a tax resident of the Netherlands. Millions of people are.

Singapore PRs (and citizens) must make Singapore MediShield Life contributions for the whole household regardless of where they reside in the world. They can make those contributions from existing Medisave funds until such funds are exhausted, then they must make those contributions from personal funds thereafter. Low income waivers and subsidies are available to those who qualify, but those are the only exceptions. Currently (as I write this) unsubsidized MediShield Life premiums range from S$130 to $1530 per year per individual; the variation depends on the individual's age. The government currently plans to hold these premiums (taxes) constant until October 31, 2020.

You cannot "buy" a re-entry permit (REP) renewal with voluntary CPF contributions. Forget that idea. You can, however, maintain Singapore PR status indefinitely provided that you're not caught outside Singapore without a current REP and that the government doesn't revoke your PR status for some quite rare reason, e.g. something criminal. A REP is exactly that: permission to re-enter Singapore. If you're never leaving Singapore, you don't actually need one. You qualify for a REP based on being an actual resident of Singapore, in simple terms, and per ICA's assessment of your individual circumstances when you attempt to renew your REP. If you're 18 months in the Netherlands and otherwise resident in (and physically present in) Singapore, and generally economically active in Singapore, that's probably fine, especially if that 18 month period is entirely contained inside the validity period of your REP. If you're 18 months in Singapore, then 24 in Botswana, then 8 in Mexico.... well, you're not a de facto resident of Singapore, are you? Thailand then the Netherlands, well....

To summarize, Singapore PR is intended and designed for genuine residents of Singapore, not for loosely or never attached individuals.
True. You are absolutely right. 12 months in Thailand and then 18 in the Netherlands. I did not foresee this when I applied for PR. But if this has to happen, it would only be right for them to reject my REP renewal come the 5-year end.

MediShield contribution is not an issue if that's what you said. I have the intention to be prepared to pay for that part anyway.

With the PR status going to be this way, I guess let's get this out of the way.

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Re: Relocating, Moving to Netherlands

Post by tj_al » Mon, 15 Feb 2016 10:10 pm

x9200 wrote:OP, could you please explain if possible why you consider your Dutch (Schengen?) visa not an issue? Assuming you are not an EU citizen, what sort of arrangement would allow you to stay there for 18 month? Are you married to somebody with the right to stay in the Netherlands (but not an EU citizen neither)?
Actually you are right. I will be following my spouse (EP holder) who is relocated from Singapore to the Netherlands for 18 months. My spouse is not EU citizen and will be under Kennismigrant visa. Under this visa, the accompanying spouse (which would be me) can work in NL as well after fulfilling some formalities.

The original plan was for me to move with my spouse (the Kennismigrant) without a job. This consideration is already done on the fact that we will be under single income and still being able to live comfortably. But someone from the industry got wind of this and the former employer would like me to join them on remote role. So this is more like something extra.

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Re: Relocating, Moving to Netherlands

Post by x9200 » Mon, 15 Feb 2016 10:33 pm

So it boils down to the dilemma whether you would rather pay much higher (as compared to SG) Dutch taxes or stay out of this remote business. I would suggest to pay the Dutch taxes if belastingdienst says the nature of your job requires so. Not sure how risky it is to try to slip under the radar, but the Dutch consider the tax guys pretty vicious (could be for a different reason though).

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Re: Relocating, Moving to Netherlands

Post by PNGMK » Mon, 15 Feb 2016 10:53 pm

I would consider registering a Pte Ltd in Singapore (you as the director). Bill/invoice your employer from that per hour. Pay Sing corporate tax on the profits. Pay yourself a tiny salary or maybe not at all - from that you need to pay income tax in the NL if resident there but none is required in Singapore and you most likely don't need to pay CPF either . Keep the bulk of the funds in the company bank account in Singapore as a pleasant thing to liquidate when you wind up the company.
I not lawyer/teacher/CPA.
You've been arrested? Law Society of Singapore can provide referrals.
You want an International School job? School website or http://www.ISS.edu
Your rugrat needs a School? Avoid for profit schools
You need Tax advice? Ask a CPA
You ran away without doing NS? Shame on you!

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Re: Relocating, Moving to Netherlands

Post by Strong Eagle » Tue, 16 Feb 2016 1:45 am

PNGMK wrote:I would consider registering a Pte Ltd in Singapore (you as the director). Bill/invoice your employer from that per hour. Pay Sing corporate tax on the profits. Pay yourself a tiny salary or maybe not at all - from that you need to pay income tax in the NL if resident there but none is required in Singapore and you most likely don't need to pay CPF either . Keep the bulk of the funds in the company bank account in Singapore as a pleasant thing to liquidate when you wind up the company.
This isn't going to fly. The Netherlands and Singapore have a tax treaty. It's purpose is two-fold: To prevent double taxation of income, and to prevent evasion of income tax.

The Netherlands, like Singapore and virtually everywhere else (USA excepted), taxes you on your income if you earn it while present in the country. It doesn't matter how the income is sourced. Since you are not doing any NL work, it is unlikely that any company legal presence is required. But, that doesn't change your personal liability for income tax in NL.

If you are in NL you will not pay any kind of Singapore personal income tax. Singapore taxes income, regardless of source, only if the services were actually rendered in Singapore. So, if you flew in for a month to do work, your income for the period would be taxable in Singapore for that period.

You can read all the gory details in this document: https://www.iras.gov.sg/IRASHome/upload ... 02010).pdf...

and... they key to the entire taxation issue is where you are resident. All indicators point to you being a resident of of NL. Therefore, you pay tax in NL.

PNKMK's idea of creating a Singapore Pte Ltd has all kinds of problems. If you are NL resident, then you are a Singapore non-resident by the tax treaty, even if you do have PR. Therefore, you will need to have a normally resident director. If your company is earning income, you, as the non-resident director, will be expected to have some income for the management of the company, and you may be called up on the carpet if you are not paying yourself something and withholding non-resident director tax. Your directors fees are also taxable in Singapore.

There is also provision in the tax treaty that your Singapore business might be considered resident in both countries if it is deriving significant quantities of revenue from NL, regardless of the actual legal presence of a corporate entity in NL. In this case, you'd be liable for corporate tax in NL as well as Singapore.

The other main problem with PNGMK's idea is paying yourself little or nothing. This scam is so universal that most every country has tax regulations in place that require that you pay yourself at a rate equivalent to the going rate for your kind of work. Otherwise, you'll get hit with penalties and interest for the amounts you should have paid yourself. Example: The typical technical marketing pro in NL earns $100,000 per annum. You pay yourself $20,000. Sooner or later, someone is going to pay you a visit to understand why your income is so low.

I see that you are doing all of this because your spouse is moving to NL. Your only real option is to to pay NL taxes.

It wouldn't matter if you were paying taxes or CPF in Singapore. Your REP is still at risk. You aren't a permanent resident. You have no address. You have no time there.

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Re: Relocating, Moving to Netherlands

Post by BBCWatcher » Tue, 16 Feb 2016 7:47 am

In case you were wondering, ordinarily foreigners need a minimum of 5 years of continuous legal residence in the Netherlands to be eligible to naturalize as a citizen.

I agree with Strong Eagle, and consequently I recommend keeping things simple or at least no more complex than they need to be.

Will your next REP renewal be before or after this 18 month stint?

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Re: Relocating, Moving to Netherlands

Post by the lynx » Tue, 16 Feb 2016 9:30 am

tj_al wrote:Hi guys,

Thanks for the previous help when I posted about moving to Thailand last year. Things have been well and now I have been facing a prospect of moving to the Netherlands.

TL:DR
Going there on a 18-month sabbatical this July actually, but a Singaporean company (a former employer) offered a remote role, so I thought, "Why not make some money on the side?". It is their first time offering such role and it is my first time too.

Basically I will live in Netherlands but not employed by any Dutch establishment, nor servicing any Dutch clients. I will serve that Singaporean company and for clients in Africa, Middle East and Asia Pacific, so NL isn't in the clientele. This company offers to check for tax and CPF matters (because I am a PR). My own visa in Netherlands is not an issue, and so are accommodation and health benefits there. I will be paid for quarterly flights to Singapore HQ and for incidental flights to their branch offices in Africa, Middle East and Asia. So no problem for this either.

They have not sure if they would need me in part-time remote role or full-time remote role. I will be dealing with technical, commercial and marketing. By the way, if this doesn't work out (due to potential tax issues or remuneration), I do not mind to forego this arrangement and remain in full sabbatical.

If I want to bill them by hourly rate, how do they quantify the number of hours spent on tasks/projects? My work will be both project- and routine-based, so I have no experience to quantify this. I am always curious by how people do this in this scenario.

I have read about Dutch tax laws and Singaporean tax laws. I know if I am in Singapore for less than 183 days there, I have to pay flat non-resident rate (which I am fine I guess). But if international tax laws in the picture (which I have yet to fully understand), not sure how to go about with this. Still reading up on Dutch tax laws (even though I know this company would get the info for me - thought would be good to know for self).

And CPF. Not living in Singapore would mean that there is no need for CPF contribution from both employer/employee, right? I can do voluntary contribution because I have plans to return to Singapore at the end of my 18-month sabbatical. How much is acceptable (to keep the PR by time of renewal)? Tried reading the threads by other PRs who are posted on overseas assignment but I seem to be unable to get firm answers.

Please correct me if I am wrong. Thank you for your time.
I'd say forget about trying to keep your PR. Like what BBCWatcher said, if you spend too many years outside Singapore prior to your REP renewal, very likely the renewal will be rejected. If you're still outside Singapore during REP rejection/expiry, you will lose your PR definitely, whether or not you make contributions to CPF. On the flip side, you can now withdraw all your CPF if your PR status is gone (unless of course, you're Malaysian, which in this case, you can never withdraw until the retirement age).

The tax part is very tricky, especially when Dutch tax is known to be among the highest in the world. If I were you, I'd say no to the remote job and enjoy full-time domestic management. After all it is only for 18 months. If you must work to stay relevant, I think it would be easier to just find a job in NL and not worry about the complications of tax. Or volunteer for charity/work in coffee houses if you must do something.

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Re: Relocating, Moving to Netherlands

Post by x9200 » Tue, 16 Feb 2016 10:15 am

I don't think it is going to be very different tax-wise regardless the telejob or more physical one. Depending on the age and earlier career development of the OP, it may be wiser to do something fitting into CV rather than do nothing.

One more aspect to consider, unless something has changed, working in NL you are going to be contributing to the state pension. I believe it is claimable after reaching the age of 65, but not sure if claimable in one piece.

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Re: Relocating, Moving to Netherlands

Post by the lynx » Tue, 16 Feb 2016 10:41 am

x9200 wrote:One more aspect to consider, unless something has changed, working in NL you are going to be contributing to the state pension. I believe it is claimable after reaching the age of 65, but not sure if claimable in one piece.
Sounds like CPF to me :P

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Re: Relocating, Moving to Netherlands

Post by BBCWatcher » Tue, 16 Feb 2016 10:46 am

x9200 wrote:I don't think it is going to be very different tax-wise regardless the telejob or more physical one.
It's not. Work is where you perform it, not how long the wire or wireless connection is between you and somebody or something else. If your office is on Wall Street, it doesn't matter whether you're trading bonds in Hong Kong, equities in London, or foreign currency in Singapore. You're working in New York City, and you're subject to city, state, and federal taxes. This is not new. In fact, the income tax was introduced in nearly all countries that have it after the invention of the telegraph in the first half of the 1800s.

However, that said, there's nothing whatsoever wrong with being subject to Dutch taxes. There's much more to life than taxation. National service, for example. ;) The Netherlands is a lovely place to live, and taxes are the price we pay for civil society. Dutch civil society is quite excellent.
One more aspect to consider, unless something has changed, working in NL you are going to be contributing to the state pension. I believe it is claimable after reaching the age of 65, but not sure if claimable in one piece.
The Netherlands is quite unusual in providing a retirement benefit to those who contribute to the Dutch system for a minimum of one year. Most social security systems require several years of contributions. For example, U.S. Social Security, which is quite generous actually, requires nontrivial contributions within any 10 calendar years in order to qualify for retirement (and spousal) benefits, although contributions into treaty country system(s) can be counted to hit 10 as long as there's at least a year or two (I think two) into the U.S. system.

So yes, an 18 month stint working in the Netherlands and contributing into the Dutch system should mean qualifying for a modest future retirement benefit. I don't think a lump sum withdrawal is allowed. It would be a future monthly annuity, in all likelihood.

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Re: Relocating, Moving to Netherlands

Post by BBCWatcher » Tue, 16 Feb 2016 10:46 am

Oh, and they have lots of tulips! And even a few windmills. It's lovely.

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Re: Relocating, Moving to Netherlands

Post by Strong Eagle » Tue, 16 Feb 2016 12:14 pm

BBCWatcher wrote:Oh, and they have lots of tulips! And even a few windmills. It's lovely.
Yes, you bring up a good point I neglected to mention... you get what you pay for. Lower tax rates in Singapore, and less services returned by the gahmen.

At this point, if I had the choice of paying higher taxes, more stability, and looking at windmills, I do believe I'd choose that over lower taxes, more uncertainty, and the Merlion.

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