Since 1 January 2026, the new double taxation agreement between Germany and the Netherlands has been applicable. It contains some new rules that are very relevant for business.
Threshold for international employee assignments
For employers, the most significant new rule is the introduction of a 35-day de minimis regulation for international employee assignments. This will significantly simplify cross-border work from a tax point of view. As before, employment income can generally be taxed in the employee's country of residence. The country of employment only has the right to tax if the work is physically carried out there and the employee is either on site for more than 183 days within a period of 12 months or the salary is or should be paid by an employer or a permanent establishment in the country of employment. If the activity was carried out, even temporarily, in the country of residence, the respective remuneration was subject to tax in the country of residence. In these cases, wages had to be split up and the employer had to fulfil wage tax obligations both in the employee's country of work and in the country of residence. The newly inserted Art. 14 para. 1a of the DTA provides, in deviation from the previous provision, that in case of an activity lasts up to 35 days per calendar year in the employee's country of residence or in a third country, the right of taxation of the country of employment remains unaffected.
For third countries, however, this is subject to the right of taxation assigned under the applicable double taxation agreement to this third country.
In practice, this means a considerable simplification, as the split up of the right of taxation between the country of residence and the country of activity can be avoided in many cases.
Example: A German employee is employed in the Netherlands. Most of the days he drives across the border to perform his work in the Netherlands. However, he stays in his home office 30 days a year or works from a German location. Notwithstanding these 30 days, the remunaration is only taxable in the Netherlands.
As the example shows, the regulation is of particular practical importance in home office cases.
In practice, it is strongly recommended to document the activities and working days and times covered by the regulation.
International participation exemption
The wording of the international participation exemption, which provides for a reduction of withholding tax on distributions, has also been amended. While partnerships as beneficial owners were previously expressly excluded from the scope, this has now been deleted. The background to this is that the Netherlands no longer considers partnerships to be taxable persons, but applies a transparent taxation. However, this does not entail an extension of the scope of application, since as before, only companies that directly hold a stake of at least 10% can claim the reduced withholding tax pursuant to Art. 10 DTA. However, according to Art. 3 para. 1 lit. e) DTA, only entities subject to corporate income tax qualify as company. This means that partnerships that are taxed transparently are not covered.
