How to get your American business to the Netherlands
The practice of Mynta Law centres around business immigration, including company incorporation services, drafting and / or reviewing commercial and employment contracts, handling work and residence permit applications and providing advice on immigration compliance to managers, HR professionals and business planners.
If you are intending to make the move and “go Dutch” for work or business, you will have to make choices and build a strategy. Most importantly, you must decide what immigration strategy is best for you and your business. Here are four migration strategies that US companies and American entrepreneurs use most when relocating to the Netherlands.
The Highly Skilled Migrant Policy
The Highly Skilled Migrant Policy is by all accounts the flagship of Dutch business immigration. The policy enables almost full competition between local Dutch employees and expats from outside the EU, provided the expats’ jobs fall within the high-paying end of the job market.
Three iron-cast salary thresholds delimit the boundaries of this successful policy, making it possible to determine at a single glance which vacancies can be filled by American citizens using the Highly Skilled Migrant policy, and which ones cannot. In 2019, the following thresholds (in euros), excluding the mandatory holiday allowance of 8 percent, will apply:
- Highly Skilled Migrants 30 years old and above: 4.500,00 per month
- Highly Skilled Migrants under 30 years old: 3.299,00 per month
- Highly Skilled Migrants recently graduated: 2.364,00 per month
Besides the salary restrictions, there are two more limitations to the Highly Skilled Migrant Policy. Firstly, the policy is only open to a closed circle of approved employers, called “recognised sponsors”, who sign to comply with far-reaching notification requirements towards the immigration authorities.
Because this circle of recognised sponsors may be difficult to get into for an American enterprise recently started in the Netherlands, a temporary solution is often found in the service of specialised payroll companies. The Dutch payroll company, which must have the status of recognised sponsor, will then formally hire the employee selected by the US company and will second him or her to work on the realisation of a Dutch branch or presence, under the authority of the board in the US.
After some time, when the US company has firmly secured its position in the Netherlands, it can apply to accede to the closed circle of recognised sponsors itself, and the Highly Skilled Migrants can then be transferred from the payroll company to the hiring company.
The most straightforward approach for the immigration of employees is to make use of the popular Highly Skilled Migrant policy.
An added advantage of this legal technique is that, in the early stage of setting up a foreign presence, there will be no immediate need to acquire in-depth knowledge about the Netherlands’ complicated employment laws, since the specialised payroll company will take care of all this.
The second limitation is that the Highly Skilled Migrant Policy is only open to employees, which excludes the (co-) owners of the business. Anyone who, directly or indirectly, holds at least 25 percent of the registered capital or ownership of his or her company cannot be a Highly Skilled Migrant and must follow a different strategy.
The DAFT Policy for business owners
In 1956, the United States and the Netherlands signed a treaty informally known as the Dutch American Friendship Treaty – or “DAFT” – which enables American business owners to obtain a Dutch residence permit easily.
According to the DAFT Treaty, American citizens must be admitted to the Netherlands if their goal is to run a business in which they have invested a “substantial amount of capital”. The way the Dutch authorities define a “substantial amount of capital” is indeed very generous: in most cases, an amount of 4.500 euros is already considered substantial.
The DAFT Treaty thereby gives American business owners with a plan to relocate to the Netherlands a real advantage, since the treaty makes the outcome of their residence permit applications very predictable and manageable. This immigration strategy additionally delivers a very good perspective on permanent residence. The DAFT residence permit – and any dependent family residence permits – will at first be valid for two years, during which the business owner can develop and direct his or her business.
If renewal is applied for, the immigration authorities will ask for an explanation of the real activities deployed so far – the company at this point must not be an “empty shell” merely facilitating the residence permit. Upon renewal, the residence permit’s validity is extended by five more years, after three of which a permanent residence permit can be applied for.
During all this time, the entrepreneurs using this visa-type keep most of the circumstances on which their residency depends in their own hands, which explains why the DAFT residence permit is so popular amongst American expats living in the Netherlands.
Truth be told, there is a disadvantage to the DAFT policy as well, which is that access to the employment market is limited not only for the business owner him or herself, but for any dependent family members as well. Only activities in self-employment are allowed, which means that no one in the family can take up a regular job without at least a complex visa-change.
For the entrepreneur’s partner (married or unmarried), this situation will remain the same for five years, whilst accompanying children can gain full access to the labour market after only one year of stay. For good reasons, this does put off some entrepreneurs, especially those who have family interests to think of too.
European Blue Card
The term European Blue Card was coined after the American Green Card, but that is about as far as the comparison goes. Whilst an American Green Card provides the holder with an unconditional right to live and work permanently in any State in the USA, the European Blue Card is neither permanent, nor unconditional, nor does it have the EU-wide validity that its name incorrectly suggests to some.
Every business requires a different approach. Luckily, the Netherlands has quite a few options.
The Blue Card is rather an employment-related residence permit, much like the Highly Skilled Migrant residence permit, and it is in fact much less popular. Where the Dutch government yearly admits more than 10.000 Highly Skilled Migrants, the number of Blue Cards issued probably lies well below 100 in total. The differences between the Highly Skilled Migrant Policy and the European Blue Card policy explain the Blue Card’s unpopularity.
Whilst the Highly Skilled Migrant policy centres around three clear salary thresholds, the European Blue Card uses only a single salary threshold, which, in 2019, will be 5.272,00 euros per month (even higher than the highest level within the Highly Skilled Migrant policy). Additionally, the applicant for a Blue Card must present his or her bachelor or master degree, which is usually not required of Highly Skilled Migrants.
Due to the fact that the immigration authorities only issue these residence permits every now and then, the work processes are also less well adapted to the Blue Card applications, making them slower than the fast-track Highly Skilled Migrant applications.
Still, the European Blue Card policy should be mentioned here because in specific situations it can have an advantage over the Highly Skilled Migrant policy, especially when a business has recently started in the Netherlands.
This is mostly due to the fact that, to use the Blue Card policy, an employer need not be admitted to the closed circle of recognised sponsors, which is clearly different from the Highly Skilled Migrant policy. An American business having just started a branch office in the Netherlands can directly employ its key personnel using the Blue Card policy and, by doing that, would avoid having to enlist the service of an external payroll company – this reduces the company’s dependency on external service providers.
There is a special policy which facilitates the temporary transfer of personnel between different companies belonging to the same group; the policy is informally known as the Intra-Company Transferees’ (or ICT) policy.
Similar to the Highly Skilled Migrant policy and the European Blue Card, the policy targets employees and excludes the (co-) owners of the multinational companies. Of all the group’s employees, only managers, specialists and trainees with higher education may use this policy for temporary transfers to the EU.
Although the EU legislation forming the basis of this category does not state particular salary thresholds, merely indicating that salaries and secondary employment conditions should be at least competitive, the Dutch practice describes a parallel with the popular Highly Skilled Migrant policy’s salary thresholds. If a multinational company abides by these thresholds, there will be no need to review the competitiveness of employees’ salaries.
There are two important differences between the Highly Skilled Migrant policy and the ICT policy. In the first place, recognised sponsorship forms no obligatory requirement under the ICT policy, where it is a clear restriction of the Highly Skilled Migrant policy. Voluntary recognition as a sponsor does provide a large reduction in handling time, and most transfers to the Netherlands are indeed applied for by recognised sponsors.
The second difference is that the ICT policy targets employees whose employers are located outside the European Union, whereas the Highly Skilled Migrant policy targets employees with a local Dutch employment agreement. The holder of an ICT residence permit cannot have a local employment agreement and is only being seconded to the Netherlands.
The ICT residence permit is only temporary in nature and is not meant to allow the holder to build up an independent position in the Netherlands. The residence permit will be valid for the duration of the secondment.
The secondment is extendable in which case the residence permit can also be renewed – but the total amount of time the spent in the Netherlands – and other EU countries – can never exceed three years for managers and specialists, and one year for trainees. After this time, the group company outside the EU should, in most cases, retrieve their employee and any dependent family members.
Choosing the right approach
Every business requires a different approach. Luckily, the Netherlands has quite a few options for American businesses wishing to expand or relocate to the Netherlands.
The most straightforward approach for the immigration of employees is to make use of the popular Highly Skilled Migrant policy. However, other options such as the European Blue Card policy, the ICT policy or the popular DAFT Treaty are all ways to get your business to the Netherlands.
Does your immigration seem complex or are you unfamiliar with these rules? Arend van Rosmalen and his colleagues at Mynta Law have vast experience with all the relevant immigration laws and procedures in the Netherlands.
Mynta Law works for individual expats as well as employers, including international trading and manufacturing companies, logistics companies, financial service providers, architectural and real-estate businesses, staffing, payrolling and relocation companies, innovative start-ups and scale-ups, and non-profit and religious organisations.