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Tim Zwinkels, BDO Accountants & Adviseurs:
"For foreign projects, check applicable conditions in the country"Nowadays, the new construction of greenhouses in the Netherlands is growing again, but in recent years, greenhouse builders and installers have been active more often in Mexico, Canada and Russia than in the Westland. On behalf of BDO Accountants & Adviseurs, Tim Zwinkels is mainly engaged in international tax advice for horticultural clients with a base in the Netherlands, who carry out projects abroad or incorporate a company. There they can be confronted by numerous financial and legal risks.
"From the Netherlands, the regulations are fairly clear, but companies venturing abroad must comply with the conditions of the country in question. Therefore, as soon as the staff crosses the border, it must be clear where the social security lies. Most people still know that you need to apply for an A1 statement, but did not think about whether the number of holidays or minimum wages fit within the foreign collective labor agreement (CLA). In the case of construction works abroad, the conditions of the country must be complied with. This might mean a higher hourly wage because of the CLA or more holidays, sometimes leading to a tripling of the minimum wage. Checks will take place on a regular basis. If you do not comply with the rules, fines may be imposed upon fines, even followed by construction being brought to a halt", Tim warns.
"Some time ago, one of our customers had three employees working abroad for two weeks, but did not pay according to the foreign CLA. In first instance it cost him a fine of 8,000 euros; a second, similar fine still will follow, and in case of non-payment, you will be banned from the concerned country for five years", continues Tim. "As BDO, we can take care of the entire administrative burden, obtain the necessary information, and provide all registrations to comply with local laws and regulations. In principle this places the risk with us, if at least we have been provided with the correct information. The problem is often that a contractor, one week before the start, does not even know exactly how the scheduling will proceed. Therefore, the registration of personnel sometimes poses a problem. Thanks to our network in the various countries we may be able to speed up certain registrations."
For Dutch growers with a branch abroad, these rules apply to a lesser degree. "However, you have to deal with the number of days that a Dutch grower spends at a foreign branch. This may lead to payment of a management fee from abroad. Certainly in the case of major financing, you may be affected by applicable interest deduction limits. If the ratio between domestic and foreign assets grows disproportionately, certain items may not be deductible and therefore you may have to pay some kind of double taxation."
"In addition, activities abroad may cause deductions on invoices or foreign value added tax might be imposed, resulting in cost increase. For example, Canada has a deduction of up to 24% on the invoice. This deduction can be prevented with a correct set-up. Finally I am dealing with Transfer Pricing, based on a sound economic analysis, to divide costs, profits and risks within a group of related companies in such a way as to achieve fiscal benefit or to prevent a disadvantage. Issues such as cultivation rights, overhead and strategic management are, for example, reasons to allocate more profit to the Dutch branch. That is always more enjoyable than profits flowing to an African country", Tim concludes.
For more information:
BDO Accountants & Belastingadviseurs
Tel: +31 (0)70 338 08 08
Publication date: 11/15/2017
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