If your company is looking for new remote workers in foreign countries, you will find that there are skilled professionals available around the world. This includes the Netherlands, a northern European country with quality education and training for its citizens.
The economy and workforce in the Netherlands are leaders in the European Union, with many talented workers in different industries. Dutch workers are well known for being reliable and honest, key qualities when hiring from abroad. Once you find a Dutch worker who fits your position, you will have to decide how to hire them.
Because of the generous statutory benefits and entitlements in the Netherlands, some workers may wish to be hired. But if your company is a startup or unsure of the long-term outlook, this won’t be the best method of hiring. You might be better off hiring the worker as an independent contractor, at least until you are ready to commit to a higher-cost employee.
Here are some of the benefits of hiring contractors:
- No long-term financial/HR commitment by the company
- Cost-effective when compared to paying employee benefits and entitlements
- Contracting is a B2B relationship, outside of typical labour laws
- A good way to give a recruit a ‘probationary’ period before hiring
- Can hire for short projects or on a repeat basis
- More flexible to scale up or down, or if different skill sets are needed as the company grows
How to hire and pay remote contractors in the Netherlands
There are a few ways to hire remote contractors, which will depend on their business structure and experience working internationally.
Hire and pay them as a freelancer
The first option is to hire self-employed freelancers, either residents or expats. Because Netherlands is an EU member, EU nationals can live and work in Netherlands visa-free. This fact may expand the pool of potential recruits beyond Dutch citizens. With a freelancer, you will contract directly, and they will invoice you for services. Cross-border payment methods should be secure and contingent on performance.
Pay them through their limited company
More savvy contractors may have their own limited company in the Netherlands, which is an indicator of their business commitment. You would contract with the limited company in a typical B2B relationship, and the contractor would carry out the services. Even if the contractor is the sole owner of a limited company, it is still registered as a valid business.
This will give your company added assurance that you can rely on the contractor, and that they likely have experience with multiple clients. It also reduces the risk of the contractor being misclassified and then assigned employee status by authorities.
Use an umbrella company in the Netherlands
A final option is to use an umbrella company in the Netherlands as an intermediary between you and the contractor. As an end client, your company benefits from this arrangement as it eliminates the risk of non-performance or contractor disputes. The umbrella company will confirm with you project completion before issuing payment.
The advantage to the contractor is that they don’t have to worry about the contract with a new foreign client. The contractor can rely on the umbrella company to withhold their taxes and contributions as an objective third party.
Compliance risks when hiring remote workers in the Netherlands
Foreign companies hiring remote workers in the Netherlands wouldn’t normally be exposed to local business or labour laws, but may still have other compliance risks.
Misclassification risk: Employee vs contractor
Misclassification of workers is a trending concern with governments, where a contractor is working under ‘disguised’ employment. In other words, if you treat the worker as an employee, the government could re-classify them if a claim were made. This would lead to you paying required social contributions and in some cases penalties.
The criteria for classification as an employee include paying a fixed salary, controlling the worker’s schedule and work methods and offering benefits. You can avoid this risk by insisting the contractor provide their contract and invoices, with clear terms of engagement.
Permanent establishment risk in the Netherlands
The other risk to your company is a permanent establishment (PE), resulting in corporate taxation. PE is not triggered by the simple act of hiring remote workers but occurs when local revenue is created through worker activity. In that case, the Netherlands would want to tax that local revenue even though you don’t have a physical business presence.
Roles like IT support, customer service and web development would not result in PE, but a sales role might. The primary test is whether contracts are being concluded regularly in the Netherlands on your behalf. In some cases, using contractors carries less risk of PE than employees, as long as you avoid misclassification.
How Contractor Taxation helps you hire remote workers in The Netherlands
Contractor Taxation has a global network of umbrella companies, including in the Netherlands, who are ready to hire the contractor and administer all the tasks related to taxes, payments and contributions. As a company looking to hire Dutch contractors, you can recommend to the new hire that an umbrella company be used to assist with the relationship. There is a fee, but it could be shared as there are benefits for you both.
Most contractors will be open to this, as it reduces the risk of non-payment with a new client and relieves them of the administrative burden of self-employment. The other advantage for the contractor is that the umbrella company fills the role of ‘employer’ in many respects. This gives the contractor an ally and advocate interface with the client and ensures the contract proceeds smoothly.
Please contact us if you are interested in hiring a Dutch or expat worker for your company as a contractor
