Umbrella Company in Netherlands
Independent contracting in the Netherlands isn’t always straightforward. Immigration issues may arise due to the various type of residence and work permits that an independent contractor may be faced with. The correct residence and work permit for you is affected by your nationality, length of stay and residency status. Taxation in the Netherlands is also complicated as taxable income is split into 3 different types (boxes) and each of these types are taxed in different ways. Furthermore, the type of work and your residency status also affects the amount of taxation you will need to pay. Missteps during the immigration and taxation processes can cost you serious money, or even land you in legal trouble.
Before you consider taking a contract in Netherlands, you should be aware of what you’re getting into – and how you can make it simpler
Difficulties of Contracting in Netherlands
Generally, you need to have an employer sponsor in order to secure the appropriate work permit and work visa for Netherlands.
If you’re working independently, it can be difficult to find clients willing to sponsor you. Moreover, even if your client can do this, you’ll need a new sponsor each time you decide to take on a new contract. Of course, every new sponsor will mean more paperwork.
Also, are you familiar with the intricacies of the tax system in the Netherlands, as well as your own country’s laws on overseas earnings? If so, good on you!
However, if you’re like the rest of us, figuring out (much less reducing) your tax liability in the Netherlands and your home country can seem like full-time work in itself.
How Umbrella Companies Work
Most freelance workers aren’t superheroes who successfully tackle these issues all on their own. There are companies who specialise in helping workers make the most out of their contracts.
They’re called Umbrella Companies (or, contractor management companies).
Basically, an Umbrella Company acts as your full-time employer, even though you maintain your independence as a contractor. They collect and filter payments from your clients, filtering out the necessary social security and fees. You send them your timesheets, and they send you payments.
Because they act as your “employer,’ they can sponsor you and provide a single work permit for multiple contracts in the Netherlands. Even better, most are experts in the Netherlands and expat tax law, meaning they’ll also help you optimise your earnings in the Netherlands.
Although the Umbrella Company is technically your “employer,” you’re essentially freeing yourself to work even more independently. You still dictate your contracts, your hours, your schedule. The Umbrella Company simply filters out the time-consuming admin and immigration issues, allowing you to focus on your new contract.
Why Use an Umbrella Company in Netherlands
Most people want to do their work, earn their money and enjoy their spare time without taking on loads of admin in a new country. That is why an umbrella company can help.
When you’re working through an Umbrella Company, you’ll essentially be outsourcing the admin and tax issues to specialists.
While the umbrella company will charge a fee, you’ll likely end up saving more money in the long run: you’ll be able to focus on your work, expertly reduce your tax liability, and comply with all laws and regulations in Netherlands (which means avoiding fees, fines, or even worse penalties).
How We Can Help You
There’s a huge variety of Umbrella Companies with different specialities and advantages in the Netherlands. How do you find the right one for your circumstances?
We work closely with Umbrella Companies all throughout the Netherlands and match contractors with the right company for them. If you’ve already secured a contract in Netherlands, we can help you find your best match (for free). Or, we can simply give you feedback on your situation (for free).
A Contractor's Guide to Taxes in Netherlands
One of the most consistently challenging aspects of contracting in the Netherlands is complying with the country’s tax system. As well as paying tax in Netherlands, you might also still be eligible to pay some tax in your home country, and understanding the legislation behind this can be a challenge.
How do I calculate my taxable income in Netherlands
If you’re working in the Netherlands under a permanent contract, many employers will handle your tax under the PAYE (pay-as-you-earn) system. This means that they calculate and process your taxes in the Netherlands for you and then send you a net wage. Your income tax, public health insurance, social security and other deductions will all be covered by this payment. This is the easiest way to handle your income tax in the Netherlands, but contractors may not be offered this service because of their short stay with each employer.
Anybody who can’t pay their tax in the Netherlands through PAYE is left with the prospect of doing everything themselves.
Do you know much about Tax Law in the Netherlands? Do the Netherlands have a tax treaty with your home country? You will need to find out or find someone who can help! Income tax in the Netherlands can range from 8.9 to 52 percent (not inclusive of the 27.65% national insurance tax that is levied on certain income tax brackets), and you need to be sure you are placed in the correct tax brackets.
Tax Filing in Netherlands
|When Do You Need to Lodge Your Tax Return?||The tax-year ends on December 31.|
|Tax Filing Deadline||May 1 for residents and July 1 for non-residents|
|Can you file it online?||Yes, https://mijn.belastingdienst.nl/mbd-pmb/|
How to File Taxes in Netherlands
Every resident or non-resident taxpayer is legally required to register for tax purposes with the Dutch tax office. In the Netherlands, payroll tax is withheld from your salary each month under a Pay-As-You-Earn (PAYE) System.
Step 1: Register for a DigiD here.
- Note: A DigiD may take a few weeks to arrange.
Step 2: The tax authority (Belastingdienst) will send you a digital invitation through Mijin.overheid.nl to file a tax return. If you do not get one, but you received income that hasn’t been taxed or you have deductions, you must still file a form online.
Step 3: Collect the necessary documentation. This may include:
- Year-end statement from employer
- Year-end statements from the bank including a mortgage statement).
Step 4: Download the electronic software program required to submit your tax return from the website, www.belastingdienst.nl.
Step 5: File the relevant form (all forms are filed electronically except for the M form).
- P form: those who are in a regular employment situation and have resided in the Netherlands for the entire fiscal year.
- M form: those who have resided in the Netherlands for part of a year.
- C form: those not residing in the Netherlands, but earn Dutch income.
Step 6: Within 6-12 weeks of submitting your tax return, you will receive a preliminary assessment from the tax authorities detailing an estimated tax return. An M and C form may take longer.
Step 7: A few weeks later, a final tax assessment will be issued, detailing the exact tax payment or refund.
Tax Figures in Netherlands
|Tax-free Threshold in Netherlands||None|
|Income Tax Rates|| |
In the Netherlands, income tax is divided into 3 categories (boxes) of income. Each box has its own tax rate and an individual’s taxable income is based on the aggregate income across all 3 boxes.
Box 1: Taxable income from work and home ownership. Includes:
Box 2: Taxable income from a substantial interest (flat rate of 25%)
Box 3: Taxable income from savings and investment (flat rate of 30%)
The above table is for the income tax rate for box 1.
*Note: in the first and second tax brackets, national insurance tax is levied at a rate of 27.65
Tax Residency in Netherlands
When do you become a tax resident in Netherlands
An individual’s residence is determined based on facts and circumstances. These can include:
- Where a permanent home is maintained.
- Where employment duties are performed.
- Where the individual's family resides.
- Where the individual is registered with the local authorities.
- The individual’s centre of economic interests.
- The intended length of stay.
The tax courts judge whether an individual has durable ties of a personal nature with the Netherlands. Ties of a personal nature exclude pure business considerations, factors like the maintenance of an abode have a more defining role.
Does the 183 day rule apply in Netherlands
Am I taxed on my global income in Netherlands
Yes, if you are resident. Non-residents are subject to tax on Netherland-specific income
Can you set up your own Limited Company in Netherlands
|How long does it take to set up||4 days|
|How much does it cost||EUR 1800|
|Is it easy?||Starting a Business Rank: 20. High ranking means that setting up a limited company in Netherland is easy.|
Tax Calculator in Netherlands
If you are a contractor and want a calculation on your tax and net retention in the Netherlands, we can supply it to you free of charge.
Using an Umbrella Company for Income Tax in Netherlands
Contractors in the Netherlands are faced with masses of paperwork and numerous wasted hours filing a tax return unless they find an alternative option. A Dutch umbrella company can act as your employer during your stay in the country whilst still allowing you the freedom of a contractor. The only difference is that you submit your timesheets to them; they’ll calculate and pay your taxes as you earn, and then you receive a net wage (as well as documentation for your records).
The companies are experts in Dutch taxation, and they’ll ensure that you keep the largest proportion of your earnings whilst complying with local laws. They can deal with any issues with the Dutch tax office or tax department directly including processing your tax refund if you are eligible.
How We Can Help You with Tax in Netherlands
We work with numerous umbrella companies in the Netherlands, many of whom are experts in tax and immigration laws. If you have any questions about tax in the Netherlands, we’ll get the answers from them directly so you can rest assured you’ll be getting accurate information. We have comprehensive knowledge of the different services they provide, and can help you find the right company to handle your income tax. We help oil and gas workers, software developers, IT project managers, testers, business analysts and telecommunications contractors get tax efficient payments and sponsorship for their Dutch work permit.
Our advice is 100 percent free, and comes with no obligations. You will be paying taxes in the Netherlands but without the overhead of directly dealing with the Dutch tax authorities. Get in touch with us today for some reliable advice on tax in the Netherlands!
A Contractor's Guide to Work Permits in Netherlands
Immigration is one of the primary concerns for any contractor hoping to start working in the Netherlands. Permanent employees will find it easy to get their Dutch work permit because they’ll receive “sponsorship” for their entire stay from their prospective employer.
Countries in the European Economic Area (EEA) and Swiss nationals are free to work in Denmark without an employment permit. Until 1 July 2018, Croatian nationals must have an employment permit to work in the Netherlands. However, nationals from outside EEA or Switzerland must apply for a combined residence and employment permit (GVVA) if they intend to work in the Netherlands for more than 3 months. Some groups of foreign nationals are not required to apply for GVVA but they must still apply to the Employee Insurance Agency for a TMV work permit (tewerkstellingsvergunning) and apply for a separate residence permit to the IND. These groups include:
- Foreign nationals intending to work in the Netherlands for less than 3 months
- Seasonal workers
- Asylum seekers
- Employees of an international company who are seconded to the Netherlands
The GVVA and TMV work permits is dependent on this sponsorship because it confirms that you’ll be earning money during your stay in the country. Contracting in the Netherlands is more difficult because the work permit is tied to one employer, so you have to change it to suit each new contract. Thankfully, umbrella companies provide a convenient and effective solution to this issue.
Work Permit Processing Time
Approximately 90 days
Can Work Permit be Processed in Country?
The contractor's work permit may be able to be processed in the Netherlands, depending on their nationality.
Work Permit Application Process
1. Obtain Documentation
The employee obtains the required documentation for the work permit application form.
2. Complete and Submit Application Form
The relevant application form is found on the official website of the Dutch Immigration and Naturalisation Department. This application is usually submitted by the local partner.
3. Obtain a BSN
A BSN or burgerservicenummer is a unique registration number for every individual living in the Netherlands. To obtain a BSN, non-EU citizens are required to provide a valid proof of identity (passport), residence permit, employment contract, and proof of address.
4. Open a Bank Account
The contractor opens a bank account in the Netherlands and provides the details to the local partner, for payroll processing.
Switch Business Visa to Work Permit?
This depends on the contractor's nationality.
How Can Umbrella Companies Help You Get a Work Permit in Netherlands ?
As your permanent employer, umbrella companies are able to sponsor you for your TMV provided they’re on the register of approved sponsors. Many different companies offer this service, because it makes contracting in the Netherlands infinitely simpler and saves you the hassle of continuous paperwork. Instead of changing your work permit every time you get a new contract, you can just work how you ordinarily would under the same permit. They protect you from the bureaucratic “rain” of legal compliance with the Dutch immigration authorities. They can even deal with the Dutch Embassy directly.