MEMO
Directors' remuneration
IN GENERAL
From an international tax standpoint, directors’ remuneration differs from other types of remuneration. When a Dutch entity decides to remunerate one of its non-resident directors, the amount of tax due can turn out to be surprisingly low. Although the situations of person X and Y may not seem to differ on first sight, for tax purposes they will be treated differently.

Assumptions:
- Employee X and director Y are both residents of a foreign country.
- Employee X and director Y both perform work in their country of residence for the Dutch entity (A).
- Employee X and director Y are both subject to social security contributions in the country of residence (‘foreign country’).
In the situation described above, the remuneration of director Y will, in most cases, be taxable in the Netherlands. The remuneration of employee X on the other hand will be taxable in the foreign country.