The most important long-term asset of almost any business is its qualified personnel. As mentioned before, the Netherlands is internationally renowned for its high-quality labour market. In addition, Dutch employees are flexible and have an excellent work ethic.
The most important long-term asset of almost any business is its qualified personnel. As mentioned before, the Netherlands is internationally renowned for its high-quality labour market. In addition, Dutch employees are flexible and have an excellent work ethic.
Trade unions in the Netherlands have a moderate character and tend to operate on the premise of consensus. Union membership is generally low and where industrial disputes do occur, they are resolved quickly and pragmatically. Employers and employees cooperate in various ways through the Joint Industrial Labour Council, the Social and Economic Council, Dutch works councils and European works councils. This cooperation also contributes to stable labour relations. As a result, growth in wage costs has been kept to moderate levels, while productivity levels remain high.
It is common practice in the Netherlands to include a bonus scheme in the employment agreement of highly qualified personnel. In certain sectors bonus/reward schemes are subject to specific statutory requirements. The wording of these schemes is of utmost importance, as the right design can have tax advantages and may save the employer unexpected costs when the employment is terminated. In addition, providing benefits (rather than paying a higher salary) can have tax advantages for both the employer and the employee.
While wage costs are moderate, it is important to notice that premiums for benefits such as social security and pensions are compulsory. They are paid by both the employer and the employee.
Dutch employers can also hire ‘self-employed persons’. A self-employed person is not an employee. In practice it is sometimes hard to make a distinction between an employee and a self-employed person. The employer should make sure that the Dutch Tax Authorities cannot consider the relationship with the self-employed person as an employment.
The government is currently working on a web module to provide employers with certainty, if possible, that a labour relationship with a self-employed person is not an employment.
In the meantime, enforcement of labour relationships with self-employed persons has been suspended until 1 October 2021, with an exception for so-called malicious parties, for whom enforcement is possible. As of 1 January 2020, the Tax Administration is also able to enforce if organisations do not (or insufficiently) follow the Tax Administration's instructions within a reasonable period of time.
Dutch law grants employees a range of protections that create obligations and potential risks for employers. These include amongst others:
It is recommended that employers have a comprehensive employment contract in place for every employee, which includes all the terms and conditions of employment and in addition protects the employer’s business interests by imposing obligations on the employee (e.g. about confidentiality of business secrets or restrictions of certain competitive activities after the employment ends).
All foreign nationals who intend to work and stay in the Netherlands are required to comply with the immigration regulations of the Netherlands. The Netherlands has a less restrictive admittance policy for highly skilled workers of multinational companies who meet specific (salary) criteria.
No immigration requirements are applicable to EEA (or Swiss) nationals. In case the stay of an EEA national exceeds four months he/she needs to register with the local municipality in the city of residence (see ‘Registration municipality’ under ‘Non-EEA national’).
According to the Dutch Foreign Employment Act an employer needs to be in possession of a work permit for a non-EEA national who will perform work activities in the Netherlands.
For stays shorter than three months the non-EEA national may need a Schengen visa (for business or tourist purposes) to enter the Netherlands. A (business) Schengen visa does not allow the non-EEA national to work in the Netherlands.
In case the intended stay will exceed 90 days (within a period of 180 days) a residence permit is required to legally be allowed stay in the Netherlands. In addition, a long term entry visa (MVV) is required before entering the Netherlands for most nationals (except for nationals from the US, Canada, Australia, South Korea, Vatican City, New Zealand, Monaco and Japan). In case the company of the foreign national is registered as a recognised sponsor and the foreign national is in possession of a valid residence permit issued by another Schengen country, no long term entry visa (MVV) is required. This exemption applies to the highly skilled migrant procedure (see below).
Which immigration procedure has to be initiated, depends on the specific facts and circumstances. The work permit procedure and the highly skilled migrant procedure are the most commonly used procedures.
While the UK left the EU on 31 January 2020, the rules regarding free movement continued to apply until 31 December 2020 based on the Withdrawal Agreement. This means that there is in principle no change to the rights of UK nationals to entered, worked and resided in the Netherlands before 31 December 2020.
Any UK national who resided in the Netherlands before 1 January 2021 is allowed to continue to do so after this date. The main requirements are that the individual registered at the town hall of the municipality where they resided before 1 January 2021 and that they have sufficient income (e.g. through paid employment). UK nationals who resided in the Netherlands for 5 years or more are eligible for a permanent residence permit while those who have not may apply for a temporary residence permit (valid for 5 years). Once these individuals have reached 5 years residence they will also be allowed to apply for permanent residence. The deadline for submission of the initial application under the Withdrawal Agreement is 30 June 2021.
The Withdrawal Agreement also ensures that UK and EU nationals who are ‘frontier workers’ may continue to pursue their activities after the end of the transition period. This is intended to secure the rights of, for example, UK nationals who regularly work in an EU member state but do not reside there. The current requirements are that the UK national resides in the UK or another EU country and worked in the Netherlands before 1 January 2021 regularly and will do so after this date as well. This set-up must also be formalized in a local contract with an employer in the Netherlands. The employee should also in principle have a Dutch tax registration number (BSN). The deadline for submission of this application is also 30 June 2021.
UK nationals arriving in the Netherlands after 1 January 2021 are subject to Dutch immigration legislation. This means they are allowed to enter and stay in the Schengen area (which includes the Netherlands) for up to 90 days in 180 days on the basis of their passport. Their passport must be valid for at least 6 months. However they will require a work permit in order to work in the Netherlands from day 1. They will also require a residence permit in case their stay exceeds 90 days in 180 days.
There are various types of Dutch work permits (e.g. for intra-company transfers and trainees). For some non-EEA nationals a single application for a combined permit for work and stay (GVVA procedure) needs to be applied for in case they plan to work and stay in the Netherlands for more than 90 days in 180 days. This procedure however is not always applicable as a number of exceptions exist. If the GVVA procedure does not apply, a separate work permit should be applied for in addition to the MVV visa and residence permit.
For non-EEA nationals assigned to a Dutch entity within the same group, the intra-company work permit procedure for key personnel may be applicable. The worldwide turnover of the group needs to be at least 50 million. Furthermore, the employee must be in the possession of at least a bachelor’s degree, have a management or key position and earn a gross monthly salary of at least 4,752 euro (5,132 euro including holiday pay, figure 2021).
The legal processing time for a combined permit is 3 months from date of submission. However in practice this can be six to eight weeks.
A residence permit for a highly skilled migrant allows a non-EEA national to reside and work legally in the Netherlands (without a separate work permit). The following requirements have to be met:
If an MVV visa is required on the basis of the nationality, the visa and residence permit can be applied for simultaneously under the so-called TEV procedure. The processing time for this residence permit (including or excluding MVV visa) is two to four weeks.
Please note that a 30 per cent tax allowance for this category of employees might be applicable (see ‘Personal income tax’).
In case the stay in the Netherlands is less than four months, registration as a non-resident in the Municipal Population Database at one of the eighteen designated offices is voluntary, but required in order to obtain a Dutch citizen service number (BSN) needed for tax and payroll purposes.
For a stay of at least four months within a period of six months, registration with the Municipal Population Database is required.
A company is required to maintain accounting records that are sufficiently adequate to determine the financial position of the company at any time. There are various regulations, including civil and tax regulations, stipulating the period for which the records should be retained. As a general rule, the records must be kept for a period of seven years.