The Migrantic partners write a weekly tax and/or immigration law column in a local newspaper. These columns are also featured below.

New social security treaty with China

On 12 September 2016, the Dutch Minister of Social Affairs, Mr. Asscher and his Chinese colleague, Mr. Yin Weimin, signed a social security treaty between the Netherlands and China. The treaty is expected to enter into force in 2017.

Why is that important? Dual social security tax liability is a widespread problem for multinational companies and their employees.

The Netherlands has bilateral Social Security agreements / treaties with over 35 countries (apart from the EU and EEA countries) to eliminate dual social security coverage and premiums for multinational companies and expatriate workers.

Without some means of coordinating social security coverage, a worker from one country working in another country may be required to pay social security premiums to both countries on the same earnings.

Also, when workers find themselves covered under the systems of two countries simultaneously for the same job (a split payroll), both countries generally require payment of social security premiums.

Employees who are temporarily transferred to work for the same employer in another country, and whose assignments are expected to last up to 5 years, remain covered only by the country of origin.

China is an important trade partner for the Netherlands. The trade in goods between our countries has grown to around 43 billion per year. Around 900 Dutch companies have a business presence in China. Burt also around 500 Chinese held companies are active in the Netherlands.

The social security treaty with China will lead to cost savings in amount of several million Euro for Dutch companies with expats in China. These companies will only have to pay Dutch social security premiums (AOW and WW) for their expats once the treaty enter into force.

On the mirror side, it will also substantially decrease the expenses for Chinese entrepreneurs to set up a business in the Netherlands with Chinese expats as only Chinese premiums will generally speaking be due (and that is also good news for Migrantic!).

This new treaty, combined with the existing China-Netherlands Double Tax Treaty and the Bilateral Investment Protection Treaty completes the ideal set of treaties with China to facilitate mutual business investments.

Tax specialist