Ted Badoux of Everaert Advocaten provides a short overview of 2015 labour migration policy, including registered sponsorship, new salary thresholds for highly skilled migrants, the 30 per cent Dutch income tax benefit for incoming employees, a new work permit waiver for intra-corporate trainees and a brand new policy for start-up companies.
All foreign nationals with plans to be engaged in employment in the Netherlands, either as self-employed entrepreneurs or as employees on company payroll, will need to obtain a work authorisation. In the case of a short-term stay, different rules apply to different situations, so a case-by-case assessment is required.
For employment and business activities during a short-term stay of up to 90 days in a 180-day period, work permit waivers available for incidental work allow the foreign national to participate in business meetings for up to four weeks out of 13 or engage in the installation, implementation and user training of software products developed and sold to a Dutch customer by the foreign employer or manufacturer of the software. A similar waiver is applicable for the installation or the repair of machines, devices or tools manufactured in industries abroad.
All waiver eligibility is determined on a case-by-case basis.
Citizens of the EU – except Croatian nationals – those from EEA countries, Switzerland and Japan are entitled to work in the Netherlands without a work authorisation. Croatian nationals already have the freedom to establish a business in the Netherlands and to provide services. Their access to the Dutch labour market is denied until 1 July 2015.
The Netherlands has had a liberal business immigration policy since 2005; many permit schemes are intended to facilitate labour immigration rather than restricting it. The Dutch government has an accelerated application procedure for highly skilled migrants. In the major cities, the immigration service (IND) has active front-desk offices serving as a one-stop shop immigration desk for migrant workers and their families, geared to improving service to the foreign corporations sponsoring their transferees and new hires and making them feel welcome in the Netherlands. To achieve the one-shop stop purpose, that is to combine the issuance of residence permits with municipal and tax registration, these immigration desks are located in Expat Centres that are staffed by the IND and the municipality. The Expat Centre in Amsterdam is a commercial operation and charges fees for its services, separate from the legal filing fees of the IND.
On the back of this liberal Dutch business immigration policy, the government has increasingly focused on compliance. Registered sponsors are subject to sanctions for non-compliance with the registered sponsorship duties. Sanctions include fines from €3,000 per employee; sponsorship registration may be invalidated after three established offences and legal recourse is provided. An employer may be sanctioned for any foreign employee, even one not under an employment contract, who is not legally authorised to perform the assigned work. Sanctions include fines ranging from €2,250 to €12,000 in 2015 for each employee found to have been working illegally.
In 2014, the Dutch government enacted a new Employment by Foreign Nationals Act extending EU recruitment efforts by employers and restricting the issue of any labour market validated work permit to a maximum of one year. Highly skilled migrant residence permits do not fall into this category.
The Knowledge Migrant Regulation – KMR scheme
The KMR scheme is fast and easy. It basically just involves a salary threshold – no skills test – and the processing time is two weeks. Applications are only available online and only to registered sponsoring employers. Holders of a knowledge migrant residence permit do not need separate work authorisation as long as they continue to work for a KMR-registered sponsoring company.
Registering of KMR sponsorship
Knowledge migrants’ employers have to be registered with the IND. Companies can obtain a registration within four to six weeks. The Dutch government currently levies a hefty filing fee of €5,116. The main requirement is that the company pays all taxes on wages and social security premiums. For companies based abroad that do not yet have a legal entity in the Netherlands or that do not have a Dutch payroll administration, preparatory additional arrangements need to be made, including the submission of an up-to-date professionally drawn-up business plan, to prevent delays or even refusals.
To qualify for a KMR residence permit a KMR-registered sponsoring employer needs to pay a monthly gross minimum salary to the KMR employee. If a KMR salary is paid from both a foreign payroll and the Netherlands payroll, the gross pay must meet this monthly salary threshold. The salary amount and currency is set out in an employment contract. Salary payments must be made by bank transfer at least once a month.
The minimum monthly gross salaries for KMR employees as per 1 January 2015 are:
• €4,189 – gross salary per month for those aged 30 or over;
• €3,071 – gross salary per month for those under the age of 30; and
• €2,201 – gross salary per month for graduates from Dutch universities and polytechnics.
These amounts do not include the mandatory 8 per cent vacation allowance for employment relations governed by Dutch law.
There is a “search period” of 12 months for the aforementioned graduates in the Netherlands to find a job with a KMR employer, starting from the day they graduate. During the search period they have full access to the Dutch labour market (ie, regardless of the salary level and whether the employer is KMR registered or not).
The statutory wage is the salary threshold for researchers at designated universities and research institutes. This salary is related to the salary that is prescribed for the anticipated function or assignment in the institute’s statute.
The minimum salaries for the KMR scheme are indexed every year by the IND; these new salary thresholds are published annually in the state newspaper Staatscourant in December. As a rule, amending KMR salaries for compliance will not be necessary for current employment contracts.
Family members, spouses and under-age children are allowed to accompany the knowledge migrant and will have full access to the Dutch labour market. The two-week processing time also applies to family members’ applications, even if they travel separately from the employee.
The highly educated can become knowledge migrants
• those with a PhD or a master’s can opt for the Dutch Highly Educated programme to obtain a residence permit as a highly skilled migrant. The features of this programme are as follows:
• master’s or PhD from an acknowledged Dutch university or institute;
• master’s or PhD abroad from the top 200 universities published in the Times Higher Education Supplement or on the list of Jiao Tong Shanghai University;
• visa application within three years of the graduation date;
• the application assessment is points based: 35 points required;
• search permit for one year only;
• no extension possible if knowledge migrant employer not found;
• work only allowed on the basis of a labour market-validated work permit; or
• salary threshold for knowledge migrant employment: €2,201 gross per month in 2015.
EU Blue Card
A uniform European Blue Card has been available since July 2011. This Blue Card is the first European work permit. (The United Kingdom, Ireland and Denmark do not use the Blue Card system.) The key requirements are an employment contract for at least one year, higher professional qualifications and a threshold salary of 1.5 times the gross national average in the member state of employment. The indexed salary amount in 2015 for the Netherlands is €4,908 gross per month. Member states may refuse the work permit by applying a quota or national and EU workforce priority. Family reunion is allowed and offers family access to the national labour market. By comparison, the Dutch national scheme for admission of highly skilled migrants applies a threshold salary as the sole requirement; it allows family reunion and the family obtains access to the Dutch labour market. The Dutch government does not apply a quota on highly skilled migrants.
Corporate businesses seldom use the Dutch Blue Card option. Generally, the national programme for highly skilled migrants is preferred despite a registered sponsorship not being required for an employer wanting to sponsor a Blue Card application. In addition, there is an extra feature of free movement for seconded employment to elsewhere within the EU. After the first 18 months, a Blue Card holder and his or her family can migrate to a second member state to take up Blue Card employment, but a second or third state may also apply a quota or refuse the permit based on national or EU workforce priority. Finally, Blue Card holders can accumulate the five years of legal residency required to qualify for the EU-regulated permanent residence permit from all the member states they have lived and worked in with a Blue Card.
Dutch work permit schemes
The Dutch general work permit scheme prescribes, among other requirements, a full labour market test, meaning a job search for suitable candidates on the European labour market by means of advertising and other appropriate recruitment efforts for at least three months. For business immigration purposes, the practical use of this scheme is limited. Instead, employers should aim at using a preferential work permit scheme including the KMR scheme; see above.
Typically, for preferential work permit schemes the full labour market test is waived. Specific sectors of industry or categories of employment may be eligible for other waivers such as exemption from the minimum wage requirement, while specific employment activities may be eligible for other benefits as set out below.
All Dutch work permits are applied for with and issued by the central work permit authority (UWV) in The Hague.
Preferential work permit schemes
Intra-corporate Transfer Scheme (ICT)
The ICT scheme allows for temporary assignments of transferees from India-based companies with at least one corporate establishment in the Netherlands, and at least 50 per cent owned. An annual sales turnover of at least €50 million is not permitted under EU Directive 2014/66, and has as yet not occurred in published executive policies and may therefore be disregarded. Thus, the ICT scheme can also be used for start-up subsidiaries by companies that transfer staff for the first time and by companies that do not yet have a legal entity or payroll in the Netherlands, which makes the scheme a flexible option. The salary thresholds are identical to the KMR scheme.
ICT work permits can be obtained for a maximum term of three years and are not renewable beyond that term.
Processing times for an ICT work permit are around three weeks, excluding the entry clearance visa or residence permit process.
Spouses and under-age children are allowed to accompany an intra-company transferee. If the spouse is locally hired the anticipated employer will obtain a work permit without a labour market test.
The definition of transferee encompasses several elements including salary, education and position. There are four main categories: (i) key personnel (subdivided into managerial staff), (ii) specialist staff, (iii) trainees and (iv) employees assigned in connection with the transfer of specific know-how and techniques.
New business developers
Foreign companies wanting to open up a Dutch subsidiary, expand or redirect their existing Dutch business operations are allowed to transfer managerial, specialist and technical personnel to supervise and assist operation of the new business development. The first work permit will be granted for one year, and the permits are renewable up to a total of three years. Salaries must be at Dutch market level. Applications must be supported by a professionally drawn-up business plan and financial justification, which will be evaluated by the RVO, a specialised agency of the Ministry of Economic Affairs.
Interns and trainees non-intra-corporate
Two types of interns coming from abroad are eligible for a work permit: interns (stagiaires) who are still in college or at a polytechnic and trainees (practicanten) who are already working but need further training on the job. See the table below.
Companies can only hire a maximum of 10 per cent of their entire personnel as foreign interns and must limit the number of foreign trainees (practicanten) to maintain a “reasonable ratio” of trainees in relation to the total number of employees. This ratio is two out of 10.
Researchers and lecturers
Various categories of academics are also exempt from the labour market test, including PhD students and junior researchers. For fellowship lecturers a work permit of one year can be obtained. In all cases the minimum wage is the salary threshold. For spouses who also want to work, employers can obtain a work permit without a labour market test. For project researchers who remain on the payroll of the original university or polytechnic, a permit for two years can be obtained.
Artists, sports persons
There are specific work permit schemes for employed artists and sports persons; these schemes are beyond the scope of this article.
Work permit waivers – short-term stay
The most important generic work permit waiver category is for incidental work – more specifically its two subcategories: software implementation and business meetings. The exemption for “software implementation” includes exemptions for assembling and repairing tools, machines or equipment, supplied by the employer established outside the Netherlands, or implementing and adapting software supplied by the employer established outside the Netherlands or instructing in the use thereof.
The generic work permit waiver for business meetings permits travel to the Netherlands for business negotiations, conclusion of contracts with companies and institutions and participation in board meetings at the Dutch headquarters of international companies. The waiver extends to home office communication outside the meeting room.
The maximum stay with regard to incidental work includes a duration of 12 uninterrupted weeks – 84 calendar days – within a period of 36 weeks for software implementation, or a maximum duration of four weeks – uninterrupted or not – within a period of 13 weeks, which, visa-wise, is 90 days. In 2015, the maximum stay for business meetings without a work permit will be extended to 90 days in a period of 12 months.
Trainees of international companies are also facilitated by a work permit waiver for as much as 12 uninterrupted weeks in a period of 36 weeks to receive in-company training, instruction on products and services and participation in in-company cultural events. This waiver is also available for company personnel who need to come over to the Netherlands to be trained and instructed on products or equipment developed or manufactured in the Netherlands.
There is no official document confirming or denying in advance that the situation at hand actually qualifies as a waiver situation. This may present an issue in the case of an audit by the Labour Inspectorate. Therefore, especially as regards software implementation, it may be advisable to have the UWV assess the employment in advance by applying for a work permit pro forma.
Short-term work assignments with employers of highly skilled migrants
Companies registered as sponsors with the Dutch Immigration Department and recognised for hiring highly skilled migrants (kennismigranten) are also assisted in obtaining UWV work permits for work assignments up to 90 days.
This policy regulation provides for a work permit application process with the following features:
• two weeks of processing;
• no labour market testing;
• age-adjusted salary thresholds of the KMR scheme;
• proof of wage payment;
• job description to be evaluated, but submission of CV and degree not required; and
• proof of visa or application for the same not required.
Worthy of note is that the immigration police registration requirement for foreign national short-termers who are not accommodated in a hotel has been lifted this year.
30 per cent Dutch tax ruling benefit
The Dutch Tax Authority has established a special tax regime subject to certain conditions for foreign employees hired to work in the Netherlands. This special rule means that approximately 30 per cent of the income of such employees can be paid tax-free. This reduces the tax burden of the total employment income of an employee. Employees can also benefit from other tax advantages related to the 30 per cent ruling (eg, interest or dividends not being taxable in the Netherlands).
The Tax Authority decides whether the 30 per cent ruling is applicable to an employee. To qualify for the ruling, the following conditions have to be met: the employee is hired by a Dutch employer from abroad; and the employee has specific knowledge and skills that are scarce in the Dutch labour market.
On 1 January 2012, a bill introduced a series of important amendments, one being a generic salary threshold similar to that for knowledge migrants aged 30 and over, principally to replace the “specific knowledge and skills” requirement. These minimum salaries for the application of the 30 per cent tax ruling are indexed every year by the Tax Authority.
Applicants should have a taxable base salary of €36,705 per annum in 2015, which means the tax-free reimbursement must be added on to reach the actual paid-out salary level for a successful application: €52,436 in 2015.
A 30 per cent tax ruling is granted for a maximum of eight years. Periods of living and working in the Netherlands over the past 25 years are deducted from the maximum grant of eight years. Anyone living within a 150km radius of the Dutch land border will not qualify as having being hired from abroad. In consequence, employees who have lived in Belgium, western Germany, parts of northern France and Luxemburg are not eligible for the ruling.
On the other hand, the 30 per cent ruling has been opened up for MA students who graduated before turning 30. Likewise, those who have found employment within one year of obtaining a PhD in the Netherlands will be deemed as having been hired from abroad. In addition, the salary threshold for these graduates is set significantly lower, at €27,901 per annum in 2015; again this amount refers to the taxable salary, which means the tax-free reimbursement must be added to reach the actual paid-out salary level for a successful application: €39,860 in 2015.
Applications for a 30 per cent ruling grant by those employed as scientific researchers are assessed without a salary threshold.
A 30 per cent ruling is advised to be requested with the Dutch Tax Authority within four months of the employee moving to the Netherlands.
Entrepreneurs and business owners are only allowed to undertake assignments if they have a residence permit as independent entrepreneurs. Otherwise, the law prohibits all labour by foreign nationals, including independents. The general permit scheme for independent entrepreneurs is a points system.
Entrepreneurs are considered independent if they own more than 20 per cent of the company. If they own 20 per cent or less, they are considered as employees and subsequently they fall under the scope of the work permit schemes or the KMR scheme. The scheme has abandoned the age threshold of 60 years.
As for all the independent schemes, the basic principle is that the applicant is serving the Dutch national interest in his or her activity. Points can be earned for personal experience, business plans or added value for the Netherlands.
It is possible to earn 100 points per category, while the required minimum per category is 30 points. Financial investments of €500,000 count as 30 points under the category of adding value to the Netherlands.
The RVO assesses the application and gives non-binding advice to the IND
A new residence permit scheme for entrepreneurs in start-up companies was enacted on 1 January 2015. This scheme aims at attracting innovative high-tech business initiatives by foreign nationals from outside the EU and the EEA. It does so by relaxing the above-mentioned points system during the first year of establishment. An application for a start-up residence permit can be granted if the RVO has assessed the business plan as both innovative and economically feasible. In the first year, income must be guaranteed at the applicable level of the Dutch social subsistence allowance. To be eligible for extension in year two, the applicant must comply with the points system of the generic entrepreneurs category.
Also, as of 1 September 2014, a new residence permit scheme has been in place for foreign national investors.
Indian persons of independent means, including their spouse and minor children, may obtain a Dutch residence permit for one year, renewable, conditional on the following requirements:
• a minimum investment of €1,250 in a Dutch company or a seed fund, participation fund or joint venture investing in a Dutch enterprise;
• the investment must be paid into a Dutch or EU bank established in the Netherlands operating under the supervision of the Dutch National Bank and using a European passport;
• the monies put up for the investment must not come from untrustworthy sources. This assessment must be made and confirmed in a report by an accountant registered in the Netherlands. The IND runs a security check on the applicant’s record as an investor through its Financial Intelligence Unit; and
the investment must add merit and value to the Dutch economy. The RVO assesses and advises on the innovation merit and the job creation value of the investment plan.
Since the introduction of this scheme, we know of only one successful application. Certain details of the Investor’s Scheme may be amended in 2015 to improve the attractiveness of the policy.