A cross border tax planning example becomes necessary long before a tax return is due. Consider a UK founder who relocates to Amsterdam while continuing to own and manage a profitable UK company. The move may look straightforward operationally, but their personal residence, salary, company management, dividend income and social security position can now fall within more than one set of rules.
For internationally mobile founders, the question is rarely simply, “Where do I pay the least tax?” The better question is: how should the facts be structured and documented so that the correct tax is paid, filings are accurate, and avoidable double taxation or compliance risk is reduced?
A cross border tax planning example: a UK founder in the Netherlands
Assume that Sarah owns all shares in a UK limited company providing digital consulting services. The company has UK clients, a small team based in Manchester, and annual profits before Sarah’s remuneration of £180,000. Sarah moves to the Netherlands in September with her family and begins working from Amsterdam on a permanent basis.
She remains a director of the UK company and continues to make commercial decisions, meet clients online and lead business development from her Dutch home office. She expects to visit the UK several times each year but will spend most of her time in the Netherlands.
At first, Sarah may assume that the company remains solely a UK matter because it is incorporated there. That assumption can create problems. Her move affects two separate areas: her own Dutch and UK tax position, and the company’s potential Dutch obligations.
Step one: establish Sarah’s personal tax residence
Tax residence is the starting point, not an administrative detail. A person who has genuinely moved their home, family life and usual place of work to the Netherlands will often become Dutch tax resident. The UK may also continue to treat them as resident under its statutory residence test, particularly in the year of departure or where substantial UK connections remain.
Where both countries could claim residence, the UK-Netherlands tax treaty is used to determine treaty residence. It considers factors such as the permanent home available, centre of vital interests, habitual abode and nationality. The outcome depends on the full facts, not merely the number of nights spent in each country.
If Sarah is Dutch tax resident, she will generally need to report her worldwide income in the Netherlands. This can include her UK salary, dividends, interest, investment returns and certain shareholdings. Her UK obligations do not automatically disappear, however. UK-source income and the departure year may still require a UK tax return and careful treatment.
Step two: decide how the founder should be paid
Sarah previously took a modest director’s salary from the UK company, supplemented by dividends. Once she works mainly from the Netherlands, leaving the existing arrangement untouched is rarely the best answer.
Her salary needs to be assessed against Dutch wage tax rules, the UK-Netherlands treaty and social security coordination rules. If she performs her employment duties in the Netherlands, Dutch payroll may be required even though the employer is a UK company. The company may need to register as a foreign employer, operate Dutch wage withholding and make the relevant payroll declarations.
The social security position must be reviewed separately. Income tax residence and social security coverage are related but not identical. For someone working primarily in one country, social insurance is often due there. Yet a meaningful pattern of work in the UK, or work across multiple countries, can change the result. An A1 certificate may be relevant in qualifying cross-border situations, but it should not be assumed to apply simply because the employer is British.
Dividends require equally careful handling. The UK company may withhold tax under UK rules where applicable, while the Netherlands taxes a Dutch-resident shareholder on their substantial interest in a company. Treaty relief and foreign tax credit mechanisms can help prevent the same income being taxed twice, but the timing, documentation and classification of payments matter.
A salary-and-dividend mix may still be appropriate, but it must reflect the work Sarah performs, the company’s governance and each country’s rules. Planning is not achieved by changing labels on payments after the event.
The company risk: a Dutch permanent establishment
The more significant issue may sit within Sarah’s company rather than her personal return. Because she is managing the business from the Netherlands, the UK company could create a Dutch permanent establishment or, in more serious cases, raise questions about where the company is effectively managed.
A home office does not automatically create a permanent establishment. The analysis depends on whether the office is at the company’s disposal, how permanent the arrangement is, the nature of Sarah’s activities and whether she habitually concludes contracts or plays the principal role in securing them.
In this example, Sarah is the sole shareholder and director. She makes key decisions from Amsterdam and has no Dutch employment contract or local entity in place. Those facts make it difficult to treat her Dutch activities as incidental. Dutch corporate tax registration, profit attribution and local bookkeeping obligations may need consideration.
If a Dutch permanent establishment exists, the business must determine what profit is attributable to the Dutch activity. That does not mean all company profit suddenly becomes taxable in the Netherlands. The allocation should follow the people functions, assets and risks connected to the Dutch presence. Sarah’s management, sales activity and strategic decision-making may justify allocating part of the profit there, while the UK team’s delivery work and local operations may support a UK allocation.
This is where informal arrangements are costly. A business needs contemporaneous evidence: board minutes, contracts, decision-making records, employment arrangements and a clear description of where core functions are performed. Good records do not manufacture a preferred tax result, but they make the actual position defensible.
A practical route: retain the UK company or establish a Dutch BV?
Sarah has two broad options. She could retain the UK limited company and put the Dutch payroll and permanent establishment position on a proper footing. Alternatively, she could form a Dutch BV and determine whether future contracts, staff and business functions should sit in that entity.
Retaining the UK company may be sensible where the existing team, contracts and commercial substance remain predominantly in the UK. It can avoid unnecessary disruption, particularly if Sarah’s Dutch role is limited and the company can manage its Dutch employer and corporate obligations correctly.
A Dutch BV may be more suitable where Sarah’s relocation is permanent, the business will hire in the Netherlands, Dutch or EU clients are becoming central, and management will genuinely be based in Amsterdam. It can provide a clearer operating structure, but it also introduces incorporation, accounting, payroll, VAT and corporate tax responsibilities. Moving contracts or intellectual property without a commercial and valuation analysis can create tax charges rather than savings.
The right route depends on the business plan. A structure that is proportionate for a one-person consultancy may be inadequate for a growing business with employees, investors and operations across several countries.
What Sarah should do before the move becomes a compliance issue
The most useful planning happens before payments, contracts and working patterns become fixed. Sarah should map her expected days in each country, identify where director and management decisions will be made, and review whether her home office is being used as a regular business location.
She should then review her salary, dividend policy and social security position together rather than treating them as separate issues. The company also needs to assess Dutch payroll exposure, corporate registration requirements, VAT treatment and the treatment of any UK tax already withheld.
Finally, the move should be reflected in governance. Board meetings, delegated authority, contract approval processes and business records should match how the company actually operates. A paper trail that conflicts with the facts offers little protection in a tax review.
Why early advice changes the outcome
Cross-border planning is not about forcing every activity into one country. It is about recognising where value is created, meeting obligations in the right place and using treaty relief appropriately. In Sarah’s case, early action could prevent missed Dutch payroll registrations, reduce the chance of unrelieved double taxation and give her a structure that supports the business she intends to build.
For founders, expatriates and companies entering the Netherlands, the most reassuring next step is a fact-based review before relocation, expansion or a major change in working arrangements. GlobeXpert can help turn those facts into a compliant, practical plan, so tax responsibilities support your growth rather than interrupt it.