Employing staff in the Netherlands means dealing with tight government regulations
Regulations with employing staff
Employing staff in the Netherlands means dealing with various tight government rules and regulations. Here is a small guideline to introduce you to the landscape: Do you want to recruit a personnel? Companies are obliged to recruit personnel in the European Economic Area (EEA) and/or Switzerland. Only companies that can prove, for example by showing the advertising and / or efforts with employment agencies, that they cannot find suitable personnel are permitted to recruit outside the EU.
Companies must verify the identity of all employees on the basis of an original identity document upon joining the company. A copy of the identity documents must be kept in the companies’ records
Romania or Bulgaria
Are you planning to employ someone who is not from the EEA or Switzerland or who comes from Romania or Bulgaria must apply for a work permit from the Public Employment Service. Special rules apply to so-called knowledge workers.
Knowledge workers are exempt of applying for a work permit if one of the following conditions applies:
The knowledge worker comes from Switzerland or the European Economic Area (EEA) with the exception of Bulgaria and Rumania
The knowledge worker will receive a gross income of more than EUR 50,619 (employees who are 30 or older) or EUR 37,121 (employees younger than 30); the amounts are from 2011
The knowledge worker is a scientist with a grant, a visiting lecturer or a participant in an exchange program of the European Union
The knowledge worker is a university lecturer, doctoral candidate, a post doctoral candidate or doctor training to become a specialist
The knowledge worker studies in the Netherlands or has graduated from a Dutch university or university for applied sciences less than a year ago. The person's starting salary must at least amount to EUR 26,605
Dutch companies are obliged first to try recruiting personnel in the EU
Obligation of companies to register their employer with the Tax Administration is crucial. The Tax and Customs Administration will then send the necessary forms to meet the applicable payroll tax obligations.
Foreign employees who do not have a Dutch citizen service number must provide companies with a tax and social insurance number. They themselves need to apply to the Tax and Customs Administration for such number.
In a contract of employment the employee’s salary is specified. The contract must also indicate whether a Collective Labour Agreement applies and outline working hours and rest times. It also has to contain arrangements in respect to an employee pension scheme.
Dutch law has a statutory minimum wage and a holiday allowance. This applies to all employees including temporary workers, flex workers and foreign personnel.
Wage Taxes
When you are not established in the Netherlands and you employ personnel who live or work in the Netherlands you must, in some situations withhold (some of the) payroll taxes in the Netherlands.
You withhold some payroll taxes from the employee's wage (wage tax and the national insurance contributions), bear the cost of some payroll taxes (the employed persons' insurance contributions) and withhold or bear the cost of some payroll taxes (the income-dependent contribution pursuant to the Health Care Insurance Act (Zvw)). The precise payroll taxes you must either withhold or pay for your account depends on a number of factors*:
You withhold wage tax when your employee must pay income tax in the Netherlands and you are under the obligation to act as a withholding agent
You withhold national insurance contributions when your employee falls under the social security insurance schemes in the Netherlands and you are under the obligation to act as a withholding agen
You, as the employer, are required to bear the cost of the employed persons' insurance contributions and the employer's contribution pursuant to the Health Care Insurance Act (Zvw), and to withhold the contribution pursuant to the Health Care Insurance Act (Zvw) from the employee's wages
*bron: Belastingdienst
Obligation of companies to register their employer with the Tax Administration is crucial
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