Working in the Netherlands. What do I need to know?

The Netherlands is an appealing location for many contractors to work. There are lots of opportunities for expats to work, with a wide range of international and multinational companies. Dutch international companies include ING Group, Shell Group, Unilever, Philips and Heineken, plus plenty of recruitment companies aimed at placing foreign workers in jobs in the Netherlands. However lots needs to be arranged for those who want to work in The Netherlands. Here are the most important thing you need to know.

Dutch Work Permit

Citizens from the European Union (EU), European Economic Area (EEA – EU plus Iceland, Liechtenstein and Norway) or Switzerland do not need residence permits or work permits, except those from newer EU member Croatia, whose citizens need a Dutch work permit for their first year. Some foreign nationals – such as highly skilled workers, Blue Card holders, the self-employed, recently graduated students on an orientation year, or those coming to the Netherlands to join a relative who has permission to work. Everybody else who wants to come and work in the Netherlands will need a separate TWV work permit (tewerkstellingsvergunning) in their name, in addition to a Dutch residence permit. See the types of Dutch residence and work permits below.

Health Insurance in the Netherlands

Expats that are living and working in The Netherlands are usually required to take out basic health insurance to cover the costs of unexpected medical care, such as consulting a General Practitioner (GP), medication and hospital treatment. Basic Dutch health insurance is available for approximately 105 Euros per month.

Taxes

Whether you are a Dutch citizen or an expat, you are required to pay taxes if you earn money while living/working in The Netherlands. The Belastingdienst (Dutch tax office) collects taxes through a variety of streams. If you are employed by a company then your income tax will be withheld from your salary by your employer, this is known as wage tax (which is contained within payroll tax). If you are self-employed in The Netherlands then you must calculate and pay your income tax via the annual tax return.

Living in The Netherlands

The Netherlands is known as the Gateway to Europe as a result of the waterway network, which links Belgium, France and Germany. The Netherlands is a popular location for expats and the majority are able to adjust easily to the Dutch way of life. As one of the world’s most densely populated countries, living in an apartment is commonplace. Expats can either rent or buy apartments and Dutch accommodation in generally of a high standard and most apartments feel spacious with large windows and high ceilings.

Culture and Language

Dutch is the official language of The Netherlands and is spoken by around 90% of the population. Around 350,000 people, or 2.2% of the population speak Frisian as their first language, mainly in the northern province of Friesland, where it is recognised as an official language.  The Netherlands is a democracy with a tolerant, open society. Everyday life is structured down to the smallest detail. Private life and work are carefully planned and nothing is left to the unexpected.

How TCP can help

With all of the above in mind, figuring out all the rules surrounding working in the Netherlands can be a difficult task, however TCP Solutions can help.

We make it easy for contractors working in the Netherlands and advise you on the most suitable solution, whether you’re a Highly Skilled Migrant, a self-employed/freelancer or prefer a local compliant payroll construction.  For employers and agencies we can also help. For over 20 years we have been working with temporary staff and staff on contracts to businesses across Europe, and we will fully indemnify everyone – individuals, agencies, employers. We are G Account Holders, with NEN4400-1 and VCU verification, and we employ over 1,000 contract and temporary staff on behalf of our clients in the Netherlands alone.

TCP not only operates in The Netherlands but also in 10 other European countries. We fully indemnify all parties (client and employee) against any risk or liability that can arise should anything go wrong with the payroll or should the employment not be set up correctly. Would you like to know more? Please contact a member of our sales team on +44 (0) 208 996 0883 or send us a message via our contact page.

SOME OTHER COUNTRY

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Expanding your recruitment agency overseas can be a great strategy for growing your business, increasing its value and getting ahead of the competition. However when setting up your new business abroad there is a lot to consider, particularly when it comes to making sure that your business is compliant with local regulations. It is important that you set yourself clear goals to ensure that you cover everything that needs to be done. Here is a simple step by step process for what you need to consider when setting up your new temp agency. 

Step 1

Before considering expanding your recruitment company abroad, one of the most important things is knowing your market and finding out the reasons for entering the market. Perform a Due Diligence report to understand the full impact of your business. Is there a need for your services? What is the competition? You need to be able to find a reason why people will chose your agency over the competition. You also want to know how to pitch yourself, what your unique selling points are and what rates you are going to charge. When deciding what country you are looking to establish in it is important to look at the macro and micro economic factors. Rank nations based upon macro-economic factors such as currency stability, exchange rates and so on. Now you have the basis to start calculating the nature of market entry costs. Some countries such as China require that some fraction of the company entering the market is owned domestically. 

It is also a good idea to build up business in the country you are planning to expand to before opening an office there. This way you can access whether you are likely to be successful there before spending huge amounts of money opening an office. Budget is also a key factor in your early stages of planning. Evaluate the costs involved in expanding your business abroad. The initial costs to think about are staff, corporate insurance, marketing and other business expenses. If you are uncertain about opening a new office in another country but would still like to expand your business you can look at other options of expanding into another country such as: licensing, franchising, partnering, joint ventures, buying a company etc.

Step 2

The next step is looking into the legal framework. It is important to make sure you are operating in a compliant way and abiding by the local laws in that country. It is a good idea to work with a lawyer in the country you will be operating in, as they will have a thorough understanding of the employment laws in that country. You will also have to be aware of any restrictions involved when hiring temporary workers as these can vary from country to country. In certain countries you need a special license to lend out labour, for example in Germany you’ll need an AUG license and in Switzerland a SECO license.

Step 3 

Once you have established the legal framework, the next step would be to look at the practicalities of opening your new office. Where will your office location be? This can be particularly important in places like Germany and Switzerland. For instance Switzerland is divided up in cantons and each has different rulings regarding labour laws so you better settle in the Canton with the most favourite rulings for your services. Location of your office can be important to your reputation so this is something that you may need to look in to. 

Step 4 

You will need to look in to the labour laws in the country you are operating in as your recruitment agency will need to be regulated and you will need to be aware of license issues. This can be complex as every country has its own set of protections and regulations. These regulations can also differ between regions and cities within a country too. Language and culture can also be a challenge. You need expert knowledge in the country you are operating which is why it is a good idea to use local lawyers and accountants. Rules for temp workers in each country can vary. For example to employ temp workers in France is very difficult, where as in The Netherlands they are much more welcoming of temp workers. You will also be dealing with different rules depending on the skills of the migrants and the visa requirements. Another thing you will have to think about is hiring staff. How many people will be working in your office? You will most likely want to employ a local director. In certain countries, such as France and Spain, you will have to provide a large cash deposit to prove you are valuable in the market. You want to know the costs up front otherwise you will lose money if things go wrong. 

There is a lot to consider when expanding your recruitment company internationally, however by following these steps you can ensure that you are fully prepared.

Possible Impact of Brexit on Contract Roles in the UK and Europe

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Nearly half, or 44%, of UK freelancers and contractors do not believe their business will be affected by Brexit. The research, which polled 1,350 UK freelancers and contractors, also showed that 18% of freelancers and contractors believe Brexit will have a positive impact on their business. Meanwhile, 38% expect Brexit to negatively impact their business. While 70% of freelancers asked currently do not work, or do not have any plans to work on projects in the rest of Europe.

What does it all mean for the UK’s contractors who want to work in Europe? Unfortunately it is too early to say at this stage as this will largely depend on the results of the exit negotiations. Until the British government has set out its negotiating position, we won’t know whether UK residents will be able to work in the EU without restriction. Since free movement of EU citizens to the UK was a hot topic during the campaign, it is possible contractors may face new hurdles when wanting to work in the EU.

What sectors will be most affected?
It is believed that Oil and Gas contractors are most likely to be affected by Brexit as they tend to have an international focus. Due to the international nature of technology, it is also likely that IT contractors will also be affected. For contractors with clients in the EU, many will need to travel to meet their clients after Brexit is finalised. However this should not be a problem as EU member states set their own immigration rules so even if there is a “hard” Brexit with no freedom of movement, countries are unlikely to place significant barriers to entry for temporary working visits. Obviously we won’t know exactly what will happen until Brexit happens, this is only what is predicted to happen.

Contracting and Brexit
Although the single market for goods is well-established in the EU, there is no such single market for services – and there are complex rules relating to how services are taxed. If you supply services from the UK, you may be liable for VAT. If you travel to the EU, your customer has to account for any VAT-equivalent. But you may still have to pay foreign VAT to the relevant authority – and thresholds are often lower than the UK. Brexit is unlikely to make these rules any simpler. Britain’s economy is dominated by services so the government is likely to make negotiations about freedom of services a priority.

Negative Implications
We are still unsure on how Brexit will impact the free movement of people in and out of the UK and the rest of Europe. Contractors and consultants who were previously able to work freely across Europe may find more difficulty and complication in working, living and receiving payments abroad.

Positive Implications
Although there is much negativity surrounding Brexit, there are some positives for contractors and consultants. As we saw in the 2008 recession, many larger businesses often turn to contractors and consultants over full time employees. Since the referendum there has already been a boom in legal services and it is likely that businesses will require consultancy in dealing with the upcoming changes and handling areas that previously fell under EU legislation.
The falling pound against the dollar and euro could also bring opportunities for clients and contractors. A falling currency may attract international clients whose purchasing power will increase. Brexit could also lead to significant changes in employment rights and Agency Workers Regulations, which may free up smaller businesses to hire more contractors.

Summary
The effect Brexit will have on contractors and consultants will largely depend on the results of the exit negotiations. While this leaves a large amount of uncertainty, we do know that any changes are unlikely to be immediate. Though there may be a period of instability, many new opportunities and benefits are likely to arise for contractors and consultants. This article is for general information only and if you do have any particular questions then please contact your tax advisor, or if we run your payroll then please contact us and we can clarify on a case by case basis.

How TCP can help?
TCP is a European Professional Employer Organisation and compliance specialist with over 20 years’ experience. Our expertise lies in the employment of skilled temporary/contract workers on behalf of clients across 11 European countries. We are always aware of changes in legislations in all countries we operate, meaning we can provide the most suitable solutions per contractor.

If you are a contractor TCP Solutions can help. When employed by TCP Solutions, as a contractor you don’t need to take on any responsibilities such as ensuring accounts and tax returns are submitted on time and the correct amount of tax is paid, as this will be done by TCP Solutions. We are also able to provide Visa sponsoring in most of the countries we operate (except the UK).

TCP’s comprehensive service in the provision of payroll and flex services can help you. We are closely monitoring the Brexit situation and will be able to help regardless of the outcome of negotiations. Would you like to know more? Get in touch with a member of our sales team on +44 (0) 208 5 800 800 or send us a message via our contact page.

Should contractors opt for self-employed or employed? What are the differences?

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A growing number of people in the UK now work for themselves and it is becoming increasingly common in many industries for businesses to look to contractors and freelancers to fill their roles. Contractors are individuals or companies that provide agreed services to clients for a set fee.  The services are often provided for a set period of time and are normally set out under a contract for services. Contractors can be self-employed or employed by an umbrella company or professional employer organisation and supplied to a client for the duration of a project.

As a contractor you can either work for yourself by setting up your own limited company, where you are responsible for compliance with all company and other statutory issues, including company law requirements to file accounts and returns to Companies House, paying the correct tax and various other statutory and government requirements.  Or you can opt to go with an umbrella company or professional employer organisation (PEO) where they would take care of all accountancy and taxation matters and also deal with all administration matters. There can be advantages and disadvantages to both.

Limited Companies

First of all we can look at limited companies. With setting up your own limited company you have full control over everything. You have complete control over transactions as well as revenue as you are paid directly in to your company bank account, rather than passing through an umbrella company or PEO. As you have direct control over your transactions there is a faster payment and administration process, however the amount of administration and paper work that goes with that is a disadvantage of running your own limited company. It can also be stressful being responsible for the day to day tasks such as invoicing, keeping an accounting system and liaising with your accountant to ensure all forms, returns and accounts are filed by the due dates.

Umbrella Companies and Professional Employer Organisations

If you decide to use an umbrella company or PEO you will avoid the time and trouble of running your own limited company and the admin that goes with that. After a simple set up all you need to do is complete time sheets and forward to your PEO. You don’t need to be involved in VAT returns, payroll matters and taxation as this is all taken care of. This is particularly good for short term contractors as you don’t have the costly process of setting up your own limited company and then arranging for it to be dissolved once you have stopped contracting. However, for contractors earning revenue outside IR35 there is a higher tax burden than using a limited company due to the Managed Service Company legislation (introduced in 2007).

Some contractors prefer using an umbrella company or PEO, while others would rather set up their own limited company and what you decide to go for will depend on a variety of factors. Consider your attitude to administration including dealing with forms, returns, VAT returns, correspondence with accountants and other third parties etc. If you don’t find this a problem then the limited company route would suit you, but if it’s likely to be a problem then the limited company route is not for you. The length of how long you will be contracting for is also something worth considering. If it is a fairly short term contract then an umbrella company is preferable as you save the hassle of setting up your own limited company which is only needed for a short period of time. If this is your first time as a contractor and you are undecided whether to go with your own company or an umbrella or PEO then I would suggest going with the latter. If you then wish to set up your own limited company later on then that is possible, however it is much harder in terms of administration and expense to go from your own company to an umbrella or PEO.

How TCP can help?

TCP is a European Professional Employer Organisation and compliance specialist with over 20 years’ experience. Our expertise lies in the employment of skilled temporary/contract workers on behalf of clients across 12 European countries. We are always aware of changes in legislations in all countries we operate, meaning we can provide the most suitable solutions per contractor.

If you are a contractor TCP Solutions can help. When employed by TCP Solutions, as a contractor you don’t need to take on any responsibilities such as ensuring accounts and tax returns are submitted on time and the correct amount of tax is paid, as this will be done by us. We are also able to provide Visa sponsoring in most of the countries we operate (except the UK).

Would you like to know more? Please contact our sales team on +44 (0)208 580 0800 or send us a message via our contact page.

How Recruiters can Benefit from Using an International Payroll Company like TCP Solutions.

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If you are a recruitment agency who hires temporary staff members and contractors, being able to pay them alongside other outlays such as supplier charges and overhead costs can often be difficult. This can result in breaks in cash flow when you are waiting for your clients to pay on contracts.  Cash flow issues can happen to any company no matter how big or small they are. Usually, larger companies have higher numbers of clients and contractors, so the cash flow problem remains.

Working with TCP Solutions is an alternative to managing your PAYE in-house and it means you can rest easy knowing that we take care of your contractors pay and tax, and ensure you are never in breach of rules. We make sure we are up to date with the rapid changes in laws and regulations, and implement any changes, ensuring 100% compliance.  Contractors are always paid on time which is another great benefit of using TCP.

As a Recruitment Company, should you decided to pay your contractors wages directly it is highly likely that they will want payment quickly and will be disinclined to wait 30-60 days which is what you will probably have agreed with your client. Consequently you will probably be required to pay your contractors once and in some cases twice before you have even received one payment from your client. Understandably, this will have a large impact on your disposable income and working capital. Pre-financing comes standard with our payroll services for contractors and we guarantee that contractors receive their wages within five working days of submitting an approved work slip. With TCP there is no need to worry about paying your candidates on time as we will do this for you. You will then be able to focus on finding the best candidates while we take care of the payroll administration and payments for you.

We have spent years dealing not just with contractors but also with agencies and we understand how complex it can be to manage contractors from varying industries, sectors, countries and backgrounds. When an agency works with us they will benefit from all the back office staff and support of TCP, all of whom are there to assist the contractors in any way they need. This can be related to employment issues, taxation, payroll, expenses or breaches of contract. Either way TCP will handle it, so the agency are free to concentrate on their work.

If you are an agency and would like to work with TCP Solutions then please get in touch with one of our sales team on +44 (0)208 580 0800 or send us a message via our contact form. We would love to discuss how we can help you employ contractors across Europe.

Reduced time for 30% tax ruling in the Netherlands

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The 30% regulation will be shortened from eight to five years with effect from the 1st of January 2019. This is proposed by the current Dutch government and written in the national tax plan for 2019. With this, the expat arrangement is drawn in line with that of neighbouring countries and it applies to new knowledge immigrants but also to existing cases.

 

Background

The cabinet got an evaluation done in 2017 carried out by the Dialogic research bureau which shows that only 20% of employees use the scheme for more than 5 years. In most cases this group appears to remain in the Netherlands for a long time and not temporarily, for which the arrangement was meant for in the first place, so the regulation for more than 5 years no longer has any added value.

 

What do these cabinet plans mean for employees?

For new expats, the new term for the scheme is directly set at 5 years. For the expats who already work in the Netherlands and are already using this scheme at the moment, the period will be adjusted to 5 years as of January 1st 2019. This means that there is no transitional phase and current knowledge migrants can immediately be confronted with the financial consequences in January.

 

What do these government plans mean for employers?

Employers and employees to whom this new legislative proposal applies were informed about this in June 2018. Nevertheless, we advise employers to inform the employees concerned again, and to clearly map the remaining term. This way misunderstandings can be prevented.

 

The Dutch 30% regulation in short

The 30% regulation (the free reimbursement of extraterritorial costs) was created for employees who temporarily reside outside the country of origin for their work. Literally, it means that employers are allowed to pay 30% of the gross wages in addition to the wage. With this allowance, expats can pay extra costs such as moving to the Netherlands and the costs of integration.

 

Nevertheless, not every expat can make use of this allowance. The scheme was specifically created to attract foreign expertise to the Netherlands. To qualify for this, the employer must apply for a decision from the tax authorities and can demonstrate why this employee has been attracted. One reason for this may be specific expertise that is scarce in the Netherlands. Factors with which the expertise is determined include the level of education, relevant experience and the remuneration level of the employee.

 

There are also a number of cases in which Dutch citizens who are sent abroad are entitled to the 30% ruling. These are mainly posted workers in education or science who work in developing countries, the former Eastern Bloc countries or military personnel.

 

Support

Do you have questions about the cabinet plans or do you want to apply the 30% regulation? Please contact TCP Solutions via 020 6757 162 or send a message via our contact page. We are happy to help.

When should I use a Professional Employer Organisation (PEO) for my company?

A professional employer organisation (PEOs) provide outsourcing for all tasks and functions typically performed by an in-house human resources department such as payroll and administration, employee health and retirement benefits and many more HR issues. PEOs act as a “co-employer” with your company as they share contractual obligations with your employees. However as the company you still guide the daily job duties and responsibilities of your employees while the PEO manages their payroll and administration related tasks.

Working with a professional employer organisation can save you considerable time when it comes to employing people. When you are employing contractors who are working on a short term contract it often doesn’t make sense to be spending endless amounts of time setting up contractors payroll when they will be leaving in a few months. Also if you are employing a large amount of contractors for a particular project you may not have the staff to do such a big task. This is where a PEO can come in handy as you can outsource the whole on boarding process to them.

Many employers and contractors are still wary of all the administration that comes with contracting. Using a PEO helps to cut back on the time required to make contracting work. This leaves employers and employees free to focus on their core business. By using a PEO the legal administration is taken care of and salary payment and invoicing are done in a timely manner, assuring the hassle of administration is minimalised. PEO’s make sure they are up to date with the rapid changes in laws and regulations that comes with employing staff.  This will prevent you from receiving penalties and fines as these laws can be complicated for your average business owners.

However there are professional employer organisation disadvantages. The main drawback is that you can feel distant from your employees. All questions about HR will now be handled by your PEO instead of contacting the HR department of your company. This can often feel distant for some of your contractors who are not used to this method.

If you think a PEO is right for you then we can help. TCP Solutions are a European Professional Employer Organisation and Compliance specialist with over 20 years’ experience. Our expertise lies in the employment of skilled temporary/contract workers on behalf of clients across 12 European countries. We are always aware of changes in legislations in all countries we operate, meaning we can provide the most suitable solutions per contractor.

Would you like to know more? Please contact our sales team on +44 (0)208 580 0800 or send us a message via our contact page.

Meet the TCP Team! Client Services Specialist

benMeet the TCP team! This month we would like to introduce our Client Services Specialist for Germany and Switzerland – Lars van der Mespel

In February 2017 Lars started at TCP Solutions as a Client Services Specialist for Germany and Switzerland, working from the head office in London.

“My work is split between introducing future employees to TCP and making sure they’re properly on-boarded, helping recruitment agencies with what they need to know in order to make a placement and coordinating with end-clients, to make sure all the paperwork is processed on time for the new employee to start.”

A typical day for Lars involves “Speaking to candidates, recruiters and end-clients, solving their problems and helping them with their questions regarding temporary employment in Germany and Switzerland. Also, assisting my colleagues in HR and Legal in setting up the necessary contractual relationships”. For Lars his favourite part of working at TCP “is where you realise that your input helps to drive the process forward” as well as “completing an entire sales cycle from initial request to contract signature”.

Before joining TCP Lars studied at university in Mainz, Germany before moving to London. His first job was in IT contract recruitment, sourcing for German clients. “While working there, I noticed that I prefer the account management/CRM/BD part of the job more than the actual recruitment bit, hence my application to join TCP”.

Outside of work Lars enjoys exploring London and the many places and opportunities the city has to offer.

The GDPR at a Glance


In recent years, due to the massive impact developments in technology have had on the way we live, work and communicate, data has become much more important for achieving great sales results. Companies are eager for valuable data which they can either sell to third parties or can use to help them sell their product.


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Impact of IR35 for Contractors in the UK

Despite opposition from contractors and employers alike, the new updates to IR35 came into effect in April 2017 for contractors working in the public sector.

IR35 affects contractors who do not meet HMRC’s definition of self-employment. The legislation was designed to stop contractors working as ‘disguised employees’, by taxing them at a rate similar to employment. Prior to the IR35 being created, the number of companies working via their own limited companies was rising at a rapid rate. Limited company owners enjoy a number of benefits which are not available to permanent staff. The government believed that many limited company professionals were in fact ‘disguised employees’ who provided services to their clients in the same way as normal employees, and not in the manner of typical ‘self-employed’ people who used their own limited companies. As a result the Intermediaries Legislation was created. If you are selected for a HMRC IR35 compliance check, the wording of your contract and the way you actually carry out the contract will be examined to determine whether you are ‘employed’ or ‘self-employed’ for tax purposes.

Since the IR35 came in to effect in April 2017, contractors suffer the most with an average 13% income drop. There has also been a backlash from contractors in the public sector, many of whom have stopped working, placing projects in jeopardy in the process. There has also been a sharp rise in non-compliance with an increased uptake in non-compliant loan schemes amongst contractors. 

In November 2017, the government used the autumn budget to confirm plans for a consultation on extending the IR35 tax avoidance reforms to the private sector, despite fierce opposition.  The consultation process will last up until summer 2018, confirming suspicions that IR35 in the private sector will not experience changes until 2019 at the earliest. Although not likely to happen soon, contractors in the private sector would be advised to plan as if the public sector rules will apply to them in the near future. 

If you are a contractor and worried about how IR35 will affect you, then TCP Solutions can help you with this. When employed by TCP Solutions, you as the contractor don’t need to take on any responsibilities such as ensuring accounts and tax returns are submitted on time and the correct amount of tax is paid, as this will be done by TCP Solutions. As an employee of TCP you will also receive paid holiday and sick pay, benefits contractors are not entitled to when self-employed.

If you do not comply with the IR35 rules you will be charged a hefty fine. TCP Solutions operates across Europe and fully indemnifies all parties (client and employee) against any risk or liability that can arise should anything go wrong with the payroll or should the employment not be setup correctly.  Would you like to know more? Please contact Ben Paulo (Business Development Executive) on +44 (0) 208 996 0883 or send us a message via our contact page.