Withholding tax processing
Withholding tax is typically a government requirement. The payer of income withholds or deducts direct tax from the payment and pays the tax to the government. Accounts payable withholding tax encompasses situations where amounts are held back from payments to the vendor and the payments are reported to the government.
Netherlands specifics
To reduce liability, a portion of a contract payment on an invoice to a subcontractor is paid into a blocked bank account per the Dutch chain liability legislation. The account is known as a G account. This amount can be used by the subcontractor to pay VAT, corporate tax, or income tax.
When resources are posted, hired out, or seconded in to the Netherlands, the recipient may request that a G account is opened. A G account is a frozen account that the recipient uses solely for payroll taxes and VAT payments to the Tax and Customs Administration.
The recipient deposits the estimated amount of payroll taxes into the subcontractor’s G account. If the subcontractor fails to make payments, then the Tax and Customs Administration cannot hold the recipient liable for the amount that is deposited into the G account.
How Infor meets this requirement
See the Payables section the Financials Setup and Administration Guide.
See the Payables User Guide.