PEO & Employer Of Record Netherlands
Infotree Global Solutions provides employer of record solutions to companies who want to set up payroll and hire employees in the Netherlands without setting a subsidiary or branch office. For companies who wish to expand business overseas, we help them to manage the legal formalities without hassles. By hiring our Employer of Record in Netherlands, you can be assured of staying compliant with the local regulations. Our in-country experts are designated with all the associated tasks to compliantly hire and onboard your employees. Using our professional support and network, you sail through the associated challenges including retaining employees, oversee payroll, laws compliance, and risk mitigation.
Expanding business or recruiting in Netherlands-Here are the requirements in detail to help you learn about the different concerns related to hiring in the Netherlands.
Table of Contents
• Hiring Considerations In Netherlands
• Setting up Payroll In Netherlands
• Payroll & Tax In Netherlands
• Employee Entitlements
• Challenges When Expanding Into Netherlands
• Netherlands Employment Compliance
• Visa and Work Permits In Netherlands
• Benefits of Netherland Hiring Outsourcing
• Why Infotree Global Solutions?
Hiring Considerations In Netherlands
Employment law in the country is not enclosed under a single law. Rather, it is governed by statutory norms codified in the Dutch Civil Code. It is further governed by a Collective Labor Agreement which includes internal rules and the employment contract. Dutch is the primary language here. Due to its robust digital infrastructure, the country has become a prime location for businesses looking for international expansion. Dutch workers are known for leading other nations when it comes to business skills and tech knowledge. It is a land of opportunity for investors and businessmen, it has legal complexities to be taken care of and the best way to deal with it is to hire Netherlands employer of record.
Setting Up Payroll In The Netherlands
Setting up payroll in the Netherlands requires you to be familiar with the employment laws, including payroll. Besides ensuring that all employees get paid without delay, you must set up payroll as per the country’s laws. The Netherlands has a strong social security system with programs that encompass residents and workers’ insurance plans only for staff. It is the employers’ responsibility to mainly fund employees’ insurance programs, but employees can also contribute. These programs vary from sick benefits to particular acts like the Health Insurance Act. Employers should fund between 20% and 25% for such types of social security contributions.
It is a little hard to figure out tax for your workers because the country has 3 various types of income ‘categories’ that have independent tax rates. Depending on the employee’s earning, income tax rates are progressive in the Netherlands, and using an employer of record Netherlands can actually help.
Payroll & Tax In Netherlands
If you want to employ staff in the Netherlands then you are obliged to deduct payroll tax from your workers’ wages. Your employer of record in Netherlands takes care of the payroll tax which includes:
• Wage tax
• Social security contributions
• Premiums for employer insurance
• Employer’s health care insurance contribution
Before you hire staff, you need to be registered yourself as an employer with the Dutch Tax and Customs Administration. You may also require to register if your organization has its registered branch in another country. After registration, you will get a payroll tax number and the forms you need.
The Netherlands follows a 30% ruling tax advantage for skilled migrants. Here employers are allowed to offer 30% of employees salary as tax-free, meaning that employee pays tax over 70% of their gross earnings. The tax rate lies between 37.35% to 49.50% based upon employee earnings. Social Security contribution is levied together with income tax. The standard rate of VAT is 21%.
The national minimum wage in the Netherlands is updated twice a year. As of January 2020, the minimum wage in the Netherlands is €1,653.60 gross monthly (€19,843.20 per year) for people aged 21 or over. There are lower minimum wage levels for those aged 15-21. The national minimum wage changes take place twice annually first in January and again in July to reflect mutually consented upon wage averages. Agreements extending beyond six months may also encompass probation periods of up to two months, but no longer than that. People working in the Netherlands are eligible for both contractual and discretionary bonuses.
By hiring an Employer of record in Netherland, you can be assured of following all the labor laws and payroll concerns. Employers must provide all contractual employees the termination notice if required. Dutch law recommends a statuary notice period of 1 month for workers, though individual agreements may reflect shorter or longer notice periods. In the case of employer dismissal without notice, it may lead him to extra compensation equivalent to the amount of potential employee income during the perceived notice period.
Challenges When Expanding Into Netherlands
Expanding to the Netherlands brings along a few concerns that you need to take care of. Choose your industry carefully and the kind of business you wish to start. It is vital to observe trade agreements that could strengthen with your move to the country. It can affect which of the 12 provinces you will select as your office headquarter. Despite having unified rules, a little variation can be witnessed based on a particular area. Dutch is considered the official natural language here. However, English is one of its languages used for official purposes. You may come across other regional languages like Frisian depending on your location. If you need to operate a business in such a province, you will require the assistance of a translator.
Be familiar with Netherlands subsidiary laws or use guidance of Netherlands employer of record. It is easy for EU nationals to transit between the country and other member states. When it comes to non-EU or EEA nationals, they will require an MVV or TWV. The country has some standardized occupations that demand a recognized qualification. Professionals in these roles will require this qualification before they join any company.
Once you get through with these factors, the setup subsidiary process involves:
• Verifying your trade name
• Authenticating your Articles of Association
• Enrolling your business with the Dutch Chamber of Commerce
• Filing with the Trade Register and Tax Office
• Opening a corporate bank account
• Making payment of employee insurance
• Organizing a risk inventory and calculation
A private limited liability firm is the most common type of corporation in the country. Depending on your business structure, you can also incorporate your organization as a public limited liability firm.
Netherlands Employment Compliance
Dutch employment law is a little complex especially when it comes to dismissal laws. In 2015, an act called the Work and Security Act was forced that modified the Dutch dismissal and unemployment laws. The legislative changes in the act recommended a change to pre-decided procedures for termination based on the grounds for dismissal which nullify the earlier system where the employer was free to select between various types of procedure like enhanced income protection for workers on flexible contracts, the decrease of disparity between fixed-term and permanent employees, the explanation of dismissal laws and growing incentives for unemployed people to find re-employment.
Thus, the act has become more complex and demanding which as a result, employers start concentrating more on flexible professional relationships whose termination is authorized by law to prevent hard dismissal procedures with unexpected results. That is not what the authorities had planned and as a result, few modifications have been introduced with the recommended Balanced Labor Market act. To promote compliance, employers are obligated to specify all factors on payslips that make up the wage encompassing expense allowances. It is better to rely on the expertise of an employer of record Netherlands to learn about the more specific details.
Visa and Work Permits In Netherlands
Foreign workers must obtain proper visas and work permits to work in the Netherlands, as recommended by immigration laws. If you are coming from outside of the European Union, and are willing to operate the business in the Netherlands, it means that you will require a residence permit and a work permit as well.
It often needs company registration and that too, prior to sponsoring work permits for staff, which can cause an issue if your organization is striving to enter the country quickly. If you have not completed the incorporation process, then it is better to use the services of an outsourced management company or employer of record Netherlands to sponsor the works for the mandatory permits. There are different types of visas in the Netherlands for different purposes like:
- MVV, Residence Permit and Work Permit (TWV)
If you wish to set up or operate a business in the Netherlands, you need to have a residence permit. In a few cases, you may also need an additional work permit (TWV) and a recognized qualification in the specific industry. Before a residence permit, you should apply for a provisional residence permit (MVV) that enables you to enter the country, unlike a tourist. However, you can apply for both the MVV and a residence permit simultaneously, called the Entry and Residence Procedure (TEV).
If you are a national of New Zealand, South Korea, Japan, Canada, Australia, or the United States of America then you don’t need an MVV. Instead, you are eligible to apply for a residence permit at the IND desk within 3 days to enter the country. The costs of acquiring a residence permit will totally depend on the legal type of your business. Netherlands Employer of record can help you renew your Residence permits annually.
- Single Permit (Combined residence and employment permit) – GVVA
Foreign nationals from outside the EEA and Switzerland are required to apply for a combined residence and employment permit (GVVA) if they are willing to work there for more than 3 months. The process to apply for an employer-sponsor work permit is issued for up to 3 years. In case, your employee has to work for less than 3 months, an individual work permit can be applied to the UWV. This type of work permit is valid for 1 year with a renewal option.
- Intra-Company Transfer
The company must be registered under the Chamber of Commerce’s trading register as suggested by the Company Trade Register act 2007. The employer may not be a recognized sponsor. For intra-company transferees, like trainees, experts, and key personnel, it is not possible to start the single permit procedure. Employers will require to apply for 2 separate applications: a work permit with UWV and a residence permit with IND.
Based on the employees’ nationality, the business owner may need to apply for a provisional Residence Permit (MVV) for the employee. An MVV is a visa that is granted for a stay longer than 90 days. The sponsor can submit an application for both permits at the same time, known as the Entry and Residence Procedure (TEV).
- Entrepreneur Permit
Ambitious entrepreneurs can apply for a temporary residence permit to work in the Netherlands. It has a residence permit entitling the applicant to be a resident of the Netherlands for one year. Within that year, the entrepreneur can create his business based on innovative products or services as guided by the experts. After one year, the entrepreneur may ask for extending the residence permit based on the Dutch government’s self-employment scheme. For it, he should meet the standard requirements that are applicable to the self-employment scheme
Benefits of Netherlands Hiring Outsourcing
By taking the help of the Netherlands Employer of Record, you can shed away countless worries associated with global hiring. Being aware of the laws of the specific country, your representative company takes care of all the legal formalities associated with eight international hirings. Their expertise in managing professional employment-associated immigration cases helps you to relieve when it comes to understanding the local labor laws and regulations.
Using an EOR is helpful in pre and in-employment screening, taxation that also includes Netherlands’ 30% tax benefit ruling, legal and payroll affairs, work permits, insurance and taxes and so. This not only helps you stay relaxed and focus on your business operations but also ensures they comply with local laws and regulations.
Why Infotree Global Solutions?
Taking your business to an international market is indeed an exciting experience. But it brings along a number of concerns. That is why partnering with Infotree Global Solutions allows your company to expand in the Netherlands without worries. Our team of experts backs up all your needs and helps you onboard your international workers quickly. By using our services, you can easily manage risk mitigation, payroll, and tax formalities because that is all done by us. As your Employer of record in Netherlands, we help you keep your business move forward no matter when you have a short-term or long-term project in mind for the Netherlands. We assist you to direct the complexities of expansion by ensuring an expansion experience where you hire one or many employees using our brand name without setting up an office.
If you are all set to mark your presence in the Netherlands, get in touch with us today and learn more about our employer of record services.