Changes in Dutch taxation and social security for flight personnel

As of April 2011 flight personnel living in The Netherlands, and who work for an airline company located in Great Britain, will face some changes in their (future) taxation. This is because the treaty of avoidance double taxation between The Netherlands and Great Britain has been revised, amongst others with respect to the taxation of flight personnel. To summarize, as of April 2011 flight personnel will temporarily have a choice as to in which country they are effectively taxed. The option will be available until the year 2014. After this transitional period flight personnel living in The Netherlands will be taxable in The Netherlands. In case of interesting deduction possibilities (e.g. mortgage interest, study costs, alimony, pension premium, etc.) it could be interesting to opt for taxation in The Netherlands. Also the relevant tax rates in both countries, as well as possibly the progression rate clause, could be leading for this choice.

The EU social security Directive, which is leading for both the UK and Dutch authorities, has also changed as of the year 2010. Based upon the previous directive (nr. 1408/71), flight personnel in principle was insured for social security in the country where the employer was located. This was the main rule on which there were some exceptions. Two of these exemptions being in case the employer had a permanent establishment in the country of residence of the employee and in case the activities of the employee were mainly performed in the country of residence of the employee. These exceptions would lead to social security liability in the country of residence.

The new Directive (nr. 883/04) states regarding flight personnel that the country in which the flight personnel normally starts and ends its shift, is the country in which flight personnel is insured for social security. For flight personnel living in the Netherlands that would probably be The Netherlands. However the previous Directive (nr. 1408/71) can be applied for a further maximum of 10 years as of the year 2010. Flight personnel may therefore choose to consider either the UK or the Netherlands as the state in which they are insured for social security. A comparison of the height of the rates and coverage should lead to a choice for either the UK or the Netherlands. If the choice falls on the UK, the Dutch tax authorities could require proof by means of an A1 declaration.

For any further advice on these specific issues please contact us. We can assist with any required tax planning and/or drawing up of the related income tax return. Please check our all inclusive tax return service following this link: http://www.okxvanleeuwen.com/?page_id=76


Jan-Hein van Leeuwen
Jan-Hein@okxvanleeuwen.com