Compliance by Country: The Netherlands

At Recruit 121 Limited we pride ourselves on connecting the world’s best-run businesses, with the very best talent. In doing so, we have provided thousands of candidates to more than 500 SAP customers around the globe.

When placing candidates in different countries, we work closely with contract management specialists to ensure that candidates fully comply, not only with the stipulations of the job they are working on, but also with the regulations of the country that they are placed in.

Here, Naveen Joshi, B.Com, GMS, EPGDIBS, Head of Research & Development at contract management and talent mobility specialists Access Financial, provides answers to frequently asked questions for contractors working in the Netherlands.


For a contract where a consultant will be working in The Netherlands, what are the residency rules/requirements and how does one go about registering in the country if required to do so?

It is mandatory for everyone to register in person with the municipality where he/she will reside, within 5 days of arrival, if he/she intends to stay in the Netherlands for 4 months or more.

Partners and children travelling with the contractor must also be registered in person.

Upon registration with the municipality, the contractor will receive a provisional certificate of registration. Thereafter, the contractor has to report to the Immigration and Naturalisation Service (IND) to apply for a residence permit. Once, IND has accepted the application, they will inform the municipality, who will then issue the BSN (burger service number or citizen service number) and send it to the registered address.

Do I need to move from a Limited Company to an umbrella company? 

It is possible, in the Netherlands, to work through your own foreign Limited Company (Personal Service Company). However, before starting your business activities you have to register your foreign PSC with the Dutch Chamber of Commerce and also have to apply for a VAR (Verklaring arbeidsrelatie). There are four types of VAR and the relationship between you and your agency/client will determine which VAR you will receive. If you are considered as a deemed employee, the agency/client hiring you will be responsible for paying income tax and social security contributions on your behalf. Also, the staffing agency or umbrella company who has hired you must also be registered with the Dutch Chamber of Commerce and should be compliant under the WAADI Act. As a deemed employee, all of your income will be considered as wages and subject to Dutch income tax and social security.

Hence, it is recommended to move to an umbrella company that is registered with the Dutch Chamber of Commerce and compliant under the WAADI Act.


What are the income tax and social security rates in The Netherlands? 

In the Netherlands, social security contributions (national insurance) are paid together with the income tax and included in the first two income tax brackets. Income tax is charged at a progressive rate from 36.5% to 52%, including national insurance contribution of 28.15% (for 2015). In addition, the employer is required to pay contributions under unemployment insurance, occupational disability insurance, sectoral contributions, child care contributions and health insurance. All social security contributions paid by the employer are calculated on the maximum contribution base of €4,331.33 per month. For an employee earning a monthly wage of €4,331.33 or more, the maximum social security contribution paid by the employer is approximately €750 per month per employee.
Are you able to give an indication of the legitimate tax allowances available to expatriates? 

High skilled migrants coming to work in the Netherlands can take advantage of the 30% ruling, if certain conditions are met. Under the 30% Ruling, the employer can grant a tax free allowance equivalent to 30% of the total salary, without any receipts of expenditure. The 30% allowance paid for extraterritorial expenses is exempt both from income tax and social security. Contractors approved for the 30% Ruling cannot claim any further extraterritorial expenses, though they are still eligible for other allowances (for example, relocation allowance, travel allowance for commuting and business travel etc.).

Those who do not qualify for the 30% ruling can get deduction for extraterritorial expenses.
Do I need a VISA to work in the Netherlands? 

If you are not an EU/EFTA national, you will require a long-stay national visa or temporary residence visa (an MVV) to work in the Netherlands. You and your sponsor in the Netherlands are required to apply for the MVV and residence permit at the same time. Nationals of Austria, Canada, Japan, New Zealand, South Korea and USA are exempt from the requirement for a MVV but the sponsor in the Netherlands is still required to apply for residence permit. Once the residence permit is approved, you are eligible to enter to the Netherlands and start work.

Should I keep my company registered in my home country? What are the pros and cons of this?

Certainly if you plan to use it again, after your assignment in the Netherlands is over.

The pros and cons are the cost of keeping the company dormant compared with the cost and administration of closing down one company and incorporating another.

For more information on freelance and permanent SAP jobs from Recruit 121, call us on +44 02920 496121 or email us at: info@recruit121.com

Recruit 121 Limited and Access Financial are unrelated companies, other payroll solution providers are available and contractors should take independent advice so that their individual circumstances are properly considered.

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