Thinking about leaving America? How to go from DAFT to Dutch citizenship

For many Americans dreaming of life in the Netherlands, the Dutch American Friendship Treaty (DAFT) offers an opportunity to establish legal residence. But what happens after you’ve made the leap? Can you turn your temporary Dutch stay into permanent roots?

This article explores the journey from DAFT to Dutch citizenship - what to expect, the hurdles to clear, and how to make the most of the process.

What is DAFT?

Signed in 1956, the Dutch American Friendship Treaty allows US citizens to live and work as entrepreneurs in the Netherlands with relative ease. Unlike the standard self-employment residence permit, the DAFT offers a simplified route for American entrepreneurs. The main requirements for Americans are:

• Registering a business in the Netherlands; and
• Investing at least €4.500 of your own capital into that business.

When preparing your application, you have to decide which type of business entity you want to set up. It is recommended to discuss this decision with a Dutch tax advisor to determine which business structure is most suitable for you. This will set you up for success when renewing your residence permit.

The DAFT permit is initially issued for two years and can be renewed as long as you continue to meet the conditions of the permit.

Life on a DAFT visa: The first few years

During your initial years under the DAFT scheme, you'll enjoy many of the benefits of Dutch residency. However, there are a few limitations:

• You cannot work as a salaried employee unless you obtain an additional work permit (which is rarely granted).
• You must maintain your main residence in the Netherlands. This means that you must stay registered as a resident, and you cannot spend too much time outside of the Netherlands.
• The equity in your business must never fall below €4.500.
• You must continue to undertake business activities in your business.

You can file a renewal application three months before your residence permit is due to expire. For a renewal, you will have to demonstrate that you have maintained the equity in your business and prove that your business is active.

While there is no minimum profit requirement, it is important that you can demonstrate that your business was operating by showing documents such as annual accounts, tax returns, contracts with clients and invoices.

If the renewal is granted, the residence permit is extended for another five years. While the treaty opens the door to residency, the DAFT residence permit still constrains how you conduct business (such as having to maintain a minimum equity in your business) and restricts your ability to work in salaried employment in the Netherlands.

It is therefore advisable to apply for permanent residence and/or Dutch citizenship as soon as possible. The pathway to permanent residence and citizenship involves a longer commitment and some strategic planning.

Talk to Everaert Advocaten about the best route for you to stay in the Netherlands

From DAFT to permanent residency

After five consecutive years of legal residence in the Netherlands, you may be eligible for permanent residence. Other key requirements include:

• Having completed the civic integration diploma (inburgeringsdiploma), unless exempt
• Demonstrating that your income is sufficient, independent and durable

While there is no strict income requirement for the DAFT permit, there is an income requirement for permanent residence. When you are self-employed, the IND will typically review whether you have had sufficient income for the three years prior to your permanent residence application.

Once you have permanent residence, your legal residence is no longer tied to your business. This means that you can work freely in self-employment or paid employment for any Dutch or foreign employer. You are also not required to work or have an income.

Your permanent residence can be revoked under certain conditions, such as if you spend too much time outside of the Netherlands or if you are convicted of a very serious crime.

Naturalisation: Becoming a Dutch citizen

After meeting the five-year legal residence and main residence threshold (or three years, if married to a Dutch national), Americans can apply for naturalisation. In order to do this, you will need:

• Your valid US passport
• Your legalised birth certificate
• A valid Dutch residence permit with a non-temporary purpose, such as a DAFT permit
• A civic integration diploma, unless exempt
• To renounce your US citizenship, once you have become Dutch

Dual citizenship

The Netherlands typically requires new citizens to renounce their previous nationality, unless their registered partner or spouse is Dutch or if they were born in the Netherlands.

However, there are other routes to establish dual citizenship. You can contact a legal professional to determine which route to dual citizenship is the best for you.

Final tips for a smooth transition from DAFT to citizen

1. Track your residence time: Even minor gaps in your legal and main residence can delay eligibility.
2. Prepare for the civic integration exams: Language learning is the biggest hurdle for many expats – start early.
3. Keep clean financial records: Self-employed applicants must prove ongoing business activity and, for permanent residence, meet an income requirement.
4. Consider permanent residence first: If you’re not ready for citizenship, this is a great long-term option.