| This article deals specifically with contractor solutions in Netherlands for companies sourcing global talent in that northern European country. Both independent contractors and hiring companies face complex cross border rules if they are located in different countries. Because of this, we have created our Contractor Solutions series with actual circumstances brought to us by our international clients and prospects. We have compiled all these questions so Campbell Curtis, our Solutions Expert, can address them. We hope you find what you need here! And if you don’t, drop us a comment below in the Contact Us form so we’d get back to you! |
Questions we cover:
- How to Hire and Pay Independent Contractors in the Netherlands
- The Dangers of Contractor Misclassification: False Self Employment Netherlands
- What are the Benefits of Independent Contractor Solutions in Netherlands
- People also asked these questions about Contractor Solutions in Netherlands
- Related topics about Contracting in Netherlands
How to Hire and Pay Independent Contractors in the Netherlands
We had a company reach out about the challenges of hiring a contractor in Netherlands, and what our recommendation would be for cost-effective compliance.
| “I have found an IT specialist that I would like to hire in the Netherlands. Our French IT consulting company has no presence in the Netherlands and is not registered at the Dutch Business Council. Therefore, I am looking for an umbrella company to hire and sponsor the new person as an independent contractor. Also, this freelancer has a UK Limited Company in order to work for international / EU clients. However, this contractor has third country citizenship in Algeria which is not a part of the EU. He needs to get a work permit to be able to work in the Netherlands. The agreement we have negotiated with the contractor means we agreed for an Exclusive Work Contract for 2 years. 1. Is it possible for him to work through his UK limited company? Or should he have a Dutch Freelance Business? 2. Otherwise, can he start with a work contract then switch to a contractor in Netherlands?” |
Campbell:
Thank you for your inquiry! We do have a solution for you through our Dutch umbrella company. I know it seems complicated right now, but I think we can smooth things out for you.
Let’s start with immigration, which is really a baseline hurdle that has to be cleared for your worker contracting in Netherlands.
You are correct that your worker will need a work permit for the Netherlands as an Algerian national. There is no official ‘self-employed visa Netherlands’, so he will need a work permit sponsor.
That sponsor must be a business in the Netherlands, and that’s where we can help you. You say that your company has no presence in the Netherlands, and this is what we provide with our umbrella company.
Our Dutch umbrella company is a duly registered entity and actively supports many contractors with work permits, invoicing and payments.
I will address your other questions one at a time:
1. First, your contractor is best off just being hired as an individual. Use of their UK limited company will mean business registrations and compliance, with little advantage and increased costs.
I know there can be increased tax deductions for the contractor with a limited company, but in my experience it’s not worth it for either of you. I imagine the goal for both of you is for him to start working in his role ASAP. Registering his limited company could take months, with no guarantee of success.
He could also start a Dutch company if he has a long term commitment to working in the Netherlands. But it’s not my first recommendation for a new hire that you want onboard quickly. We really want to help you keep things simple!
In the end it will be faster and easier initially to bring them directly onboard to the umbrella company we have in place. He can start a company at a later date if he wishes, and we can help with the transition.
2. Second, the fact that you have already negotiated a two year contract is great. This means that we can get started right away. Your company will be the contracting party with the worker. But we will administer every part of invoicing, payment and tax withholding under that relationship.
Simply put, the worker will technically be employed by the Dutch umbrella company (not by you) and we will sponsor his work permit. There is no need to switch to contractor status at any time, unless he decides to adopt a different business structure in the Netherlands.
Indeed, many of our contractors remain with their respective umbrella companies for many years. We hope you will find it just as valuable.
The Dangers of Contractor Misclassification: False Self Employment Netherlands
| “Is there any problem with misclassification under Dutch law if we hire an independent contractor or he wants to change his status from the umbrella company?“ |
Campbell:
LIke most countries, there are rules around misclassification of Netherlands contractors where they are treated like employees. But this is another benefit of using an umbrella company for hiring purposes, as they are not really contractors to begin with. So there is no risk of false self-employment charges.
If at some point, your worker wants to start their own company, then they might fall within misclassification criteria depending on the nature of your work relationship.
Most of these rules revolve around ‘control’ of the worker’s time and methods. So, it’s best from the start to make sure they are truly independent.
What are the Benefits of Independent Contractor Solutions in Netherlands
| “Can you explain the benefits of using your contractor solutions in Netherlands and paying the fees for contractor management and obtaining a work permit?“ |
Campbell:
Naturally, every company is concerned about the cost of hiring foreign workers. But you also have to consider the expense of your options vs an umbrella company solution.
Your other primary choice is to create a fully DIY employment solution in the Netherlands, including setting up your own entity. This is a decent option if you plan on hiring many workers in one country, but it’s not inexpensive.
We think our fee structure is the most cost-effective method for hiring contractors abroad. Keep in mind that our service benefits the contractor as well, so you can suggest splitting the monthly fees.
But to answer your question about benefits of our contractor solutions in Netherlands, here are a few.
- Access to the Dutch 30% tax ruling: Because your foreign worker is an ‘employee’ of the Dutch umbrella company, 30% of their income is potentially tax free. It applies to certain categories of highly skilled workers. This tax ruling is not available to contractors.
- Valid sponsor for work permits, in full compliance with Dutch immigration laws. Your worker will find it difficult to secure a work permit via other channels. We handle it all for you.
- Verified processing of all contractor invoices, payment and tax withholding. You and your worker are guaranteed accurate withholding and compliance with Dutch law.
- In the event of a dispute with a worker, the umbrella company can act as an intermediary. This avoids any unnecessary litigation or even worker termination.
People also asked these questions about Contractor Solutions in Netherlands
Absolutely, and many companies do exactly that. Using an umbrella company is sometimes referred to as ‘seconded employment’, since the worker’s permits and payments are administered by the Dutch umbrella company.
When you use a Dutch umbrella company there is no need for your company to engage in any business registrations. Your sole relationship is with our umbrella company, who acts as an intermediary with your worker for invoicing and payment.
Non-EU citizens must have a Dutch company sponsor their work permit. This can be either an employer in the Netherlands, or a Dutch umbrella company.
When using an umbrella company to hire a contractor, there is no need for your company to have a presence in the Netherlands.
It is possible, for example if the worker wants to shift from an umbrella company to being independent. But they would have to use their own company for work permit sponsorship.
In this case, hiring companies would contract directly with the UK limited company. As long as it is duly registered in the UK, that is a valid contract. The freelancer would still need to work out their work permit in some way. Some EU countries do offer self-employment visas such as Spain, so that is one avenue.
Please fill in our General Inquiry form, and we can give you our local partner’s pricing for your specific situation.
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