Income tax in the Netherlands

The tax system in any given country is invariably an extremely important criterion when it comes to companies finding a country of incorporation. The view taken by the Dutch government is that the tax system may under no circumstances form an impediment for companies wishing to incorporate in the Netherlands. In that framework, it is possible to obtain advance certainty regarding the fiscal qualification of international corporate structures in the form of so-called Advance Tax Rulings. In addition, the Netherlands has also signed tax treaties with many other countries to prevent the occurrence of double taxation.

The following are a few of the benefits offered by the Dutch tax system:

  • The Netherlands does not charge tax at source on interest and royalties.
  • In most cases all the profits that the Dutch parent company receives from foreign subsidiaries are exempted from tax in the Netherlands (participation exemption).
  • The Netherlands offers attractive tax-free compensation in the form of the 30% scheme for all foreign personnel who are temporarily employed in the Netherlands.

The Dutch tax system can be divided into taxes based on income, profit and assets, and cost price increasing taxes.

Below you find a summary regarding income tax.

Income tax

Income tax is a tax levied on the income of natural entities with domicile in the Netherlands (domestic taxpayers). They are taxed on their full income wherever it is earned in the world. Any natural person who is not domiciled in the Netherlands, but earns an income in the Netherlands, is liable to pay income tax on the income (foreign taxpayers). Foreign taxpayers can also opt to pay domestic taxes. In the latter instance, the taxpayer is subject to all the rules applicable to domestic taxpayers.

In principle, income tax is charged on an individual basis: Married persons, registered partners and unmarried cohabitants can however mutually distribute certain joint income tax components.

Tax base
Income tax is charged on all taxable income. The different components of taxable income are broken down into three ‘closed’ boxes; each at a specific tax rate.

Each source of income can only be entered in one box. A loss in one of the boxes cannot be deducted from a positive income in another box. A loss generated in Box 2 can be deducted from a positive income in the same box in the previous year (carry back) or in one of the nine subsequent years (carry forward). A loss in Box 1 can be deducted from a positive income in the same box in the 3 preceding years or in one of the subsequent 9 years. Box 3 does not recognize a negative income.

Box 1: Taxable income from work and home

The income from work and home is the sum of:

  • The profit from business activities;
  • The taxable wages;
  • The taxable result of other work activities (e.g. freelance income or income from assets made available to entrepreneurs or companies);
  • The taxable periodic benefits and provisions (e.g. alimony and government subsidies);
  • The taxable income derived from the own home (fixed amount reduced by a deduction equivalent to a specified interest paid on the mortgage bond);
  • Negative expenditures for income provisions (e.g. repayment of specific annuity premiums);
  • Negative personal tax deductions.

The following allowances apply to the above-mentioned income components:

  • Expenses for income provisions (e.g. premiums paid for an annuity insurance policy or a disability insurance);
  • Personal deductions. This concerns costs related to the personal situation of the taxpayer and his family that influence his ability to support himself and his dependents (e.g. medical expenses, school fees and specific living expenses for children).

The tax rate in Box 1 is progressive and can accumulate to a maximum of 52%.

Business allowances and exemptions for Small and Medium-size Enterprises (SME) (MKB in Dutch)
A natural person who derives income from business activities qualifies for tax allowances for entrepreneurs under certain circumstances. The tax allowances for entrepreneurs include self-employed allowance, research and development allowance, overtime allowance and discontinuation allowance. In addition, a starting entrepreneur is also entitled to a start-up allowance.

The SME Allowance (MKB-vrijstelling) will also come into effect in 2007. This entails that entrepreneurs will be entitled to an additional exemption of 12% (2010) of the profits following deduction of the start-up allowance.

Box 2: Taxable income from substantial interest

Substantial interest applies where the taxpayer, with or without his partner, is a direct or indirect holder of a minimum of 5% of the paid-up capital in a company of which the capital is distributed in shares.

The income from substantial interest is the sum of the regular benefits and / or sales benefits reduced by deductible costs. Regular benefits include dividend payments and payments on profit-sharing certificates. Sales benefits include the gains or losses on the sale of shares. Examples of deductible costs include the following: consultancy fees and the interest on loans taken out to finance the purchase of
the shares.

The tax rate in Box 2 is 25%.

Box 3: Taxable income from savings and investments

Box 3 charges tax on the taxpayer’s assets. This assumes a fixed return on investment of 4% of the yield base. The yield base is the average value of the assets less the average value of the debts. The average value is obtained by adding up the assets at 1 January and at 31 December and dividing the sum by two.

The following assets are included under Box 3: Savings, a second house or holiday house, properties that are leased to third parties, shares that do not fall under the substantial interest regime and capital payments paid out on life insurance.

Debts in Box 3 include the following: Consumer loans and mortgage bonds taken out to finance a second house. Per person, the first € 2,900 (2010) of the average debt is not deductible from the assets.

Untaxed assets
All taxpayers are entitled to untaxed assets in Box 3 of € 20,661 (2010). The amount is intended to reduce the yield base. The untaxed assets can be increased by a child allowance of € 2,762 (2010) per minor. Taxpayers of 65 and older are entitled to an extra increase up to a maximum of € 27,350 (2010) under certain conditions. A fixed return of 4% is then calculated on the amount remaining after deduction of the exemption. 30% tax is then paid on this return.

The tax rate in Box 3 is 30%.

Tax allowances
Once the due tax has been calculated for each box, certain tax allowances are deducted from those amounts. All domestic taxpayers are entitled to a general tax allowance of € 1,987 (2010). Depending on the personal situation of the taxpayer and the actual amount of the annual income, the taxpayer may also be entitled to additional tax deductions.

Advance tax payments
Tax is withheld in advance over the course of the tax year for income deriving from work activities and from dividends. Both wage withholding and dividend tax are advance tax payments on income. The withheld amount may be deducted from the income tax due.

Tax declaration
The income tax declaration for any given tax year must be submitted to the tax authority in principle before 1 April of the next year. If a firm of accountants produces the return an extension scheme applies. This means that the return may also be submitted later in the year.

Author: Harry den Hond, Schagen Lensen & van Krieken Accountants, www.slk.nl


Personnel in the Netherlands

Finding and retaining personnel is an essential condition for the existence and growth of an organization. Companies stand out through the personnel they employ. Dutch tax legislation allows numerous options for rewarding personnel in fiscally friendly ways.

The Dutch legislation includes various provisions to secure the rights and obligations of both employer and employee in the Dutch employment market. As a general rule, the employer and employee should behave according to the standard of good employership or employeeship respectively. The employer has a number of specific legal obligations with respect to work and rest times, leave and working conditions.

Wage tax

As is evident from Section 5 Tax Legislation, wage withholding tax is an advance tax payment on income tax. Anyone deriving an income from employment in the Netherlands is liable to pay income tax on the income. In addition, employees in the Netherlands are generally covered by social security. The employer withholds the social security premium and wage tax due from the wages as a single amount and subsequently pays this to the tax authorities. The combined amount is referred to as wage tax. The wage tax is subsequently settled against the amount of income tax due.

Wage tax is calculated on the full value of the remunerations received by the employee based on the employment contract. The remuneration may take the form of cash, such as a salary, holiday allowances, overtime, commissions and payments for a thirteenth month Employees can however also receive remuneration ‘in kind’, such as products from the company or holiday trips. The concept of remuneration also includes various other claims, compensations and provisions.

A claim is a right to receive a benefit or provision after a period of time or subject to certain predetermined conditions. One example of the latter is the right to receive retirement benefits. Examples of provisions include tools, meals, public transport tickets, etc. ‘Compensation’ normally refers to amounts that the employer pays its employees to cover costs incurred by the employee in the fulfilment of his or her job.

Tax rate

The wage tax rates in 2010 are:

  • On the first € 18,218 of taxable income: a percentage of 33.45% is withheld (2.30% wage tax and 31.15% social security premium);
  • On the next € 14,520 of taxable income: a percentage of 41.95% is withheld (10.80% wage tax and 31.15% social security premium);
  • On the next € 21,629 of taxable income: 42% is withheld;
  • On all additional income: a percentage of 52% is withheld.

When withholding the wage tax, the employer must also take into account the general tax allowance and the labour allowance. The latter discounts are discussed in greater detail in Chapter 5 Tax Legislation.

The employer himself, rather than the employee is liable for certain taxable components of the wage. This concerns the so-called final levy components. Certain forms of compensations ‘in kind’ are eligible for final levy payment, such as traffic fines not charged to the employee and excessive compensations and provisions of a maximum of € 200 (2010) per month. An important example of a compulsory final levy component is a redundancy payment for an older employee which actually qualifies as an early retirement payment.

Tax-free compensations and provisions

Not all compensations and provisions are taxable components of the wage. Compensations are tax-free in as far as they are deemed to be issued to cut costs, liabilities and depreciations with respect to the proper fulfilment of the employment contract. Compensations paid by the employer to the employee, and which are not generally perceived by society as remuneration and which society considers the reasonable duty of the employer to pay or provide, are also included in the latter category. A ‘free’ compensation is always paid out in the form of cash, while a ‘free’ provision could also be provided in the form of goods and services. The concepts are considered equivalent to the greatest extent possible. If something can be provided untaxed, then it can generally also be compensated untaxed. Certain forms of compensation and provisions are however only exempted up to a certain limit and in some instance standard amounts apply. The following are a number of ‘free’ compensations and provisions.

Travel expenses

Employers are entitled to pay their personnel untaxed compensation of € 0.19 (2010) per kilometre for home-work travel and other work-related kilometres. This is irrespective of the means of transport used. When using public transport, the employer is entitled to choose between the completely untaxed compensation of the actual cost of the public transport and an untaxed compensation of € 0.19 per kilometre. Alternatively, the employer may provide the employee with a car (in case of any private use of the car, a percentage of the catalogue price must be added to the employee’s taxable income).

Coffee and refreshments

Expenses for refreshments taken during work hours, such as coffee, tea, confectionary and fruit may be provided untaxed. The employer is entitled to provide the above items free of tax without the need for documentary proof to the value of € 2.75 per week or € 0.55 a day (2010).

Meals

Meals may be provided untaxed provided that the business character is of more than incidental interest. The value of a meal at a company canteen is set at the fixed amount of € 2.20 (2010) for a coffee meal or breakfast and € 4.20 (2010) for a cooked meal.

Company products

Employers are entitled to offer their employees discounts or compensation for purchasing products produced or manufactured by the company. This can be done tax-free subject to the following conditions: These must be products that are unique to the industry in which the company operates; The maximum discount or compensation per product must be 20% of the market value of the product; The total value of the discount or compensation may not exceed € 500 per calendar year. If in any calendar year the employee does not make use of this facility, any remaining amounts may be carried forward for a maximum of 2 calendar years.

This may also extend beyond the termination of the employment contract due to disability or retirement.

Study/Training

Study and / or training expenses incurred by the employee with a view to obtaining an income can be compensated free of tax. This includes study and course fees, the cost of study books and other study materials. The following items are exceptions to the above and are taxed: compensation for costs related to a work room or study space, including its design and furnishing; compensation for foreign travel in as far as the compensation exceeds € 0.19 per kilometre.

Relocation

If an employee is required to relocate for work purposes, the employer is entitled to compensate the employee free of tax for the moving costs for his household goods. In addition the employer may give a tax-free moving expenses allowance of a maximum of € 7,750 (2010). The condition is however that this is a move that is entirely related to the employment. This in any case applies if the employer gives the allowance within two years after the employee accepts the new employment (or after transfer) and the employee moves to a dwelling less than 10 kilometres from his/her work where he/she previously lived further that 25 kilometres away from his/her work.

Courses, congresses, etc.

Employers are entitled to compensate employees free of tax for the cost of courses, congresses, seminars, symposiums, excursions, study trips and so forth. This also covers the related travel (maximum € 0.19 p/km) and accommodation. This must however involve professional expenses.

Representation costs

The cost of receptions, festivities, gifts, promotional gifts and entertainment, including the associated travel (maximum € 0.19 p/km) and accommodation can also be free of tax compensated. This must however involve professional expenses.

Employment relationships

According to Dutch law, 3 different general types of agreements are used to determine the rights and duties of persons performing activities in the course of a business for another party. The employment agreement (‘arbeidsovereenkomst’) is the most common agreement. The assignment agreement (‘overeenkomst van opdracht’); for example, a freelance agreement, consultancy agreement or a management agreement is used often in an attempt to avoid an employment agreement coming into being. A third agreement is the contracting agreement (‘aannemingsovereenkomst’). This agreement is concluded between parties if the purpose of the activities is to construct an item with a physical nature.

Essential features of the employment agreement are: the obligation to perform labour in person in return for pay, and the authority of the other party to give instructions as to how the labour is to be performed. Other agreements lack one or more of these features. The employment agreement itself is not subject to rules as to its form (oral agreements are perfectly valid, although problems as to proof may arise). However, according to Dutch labour law the employer is under the obligation to provide certain information in writing to the employee with respect to the employment agreement. This relates to place of work, job title, the date the employment agreement enters into force, remuneration, working hours, terms and conditions relating to holidays and the applicability of any collective labour agreement.

Furthermore, Dutch labour law takes the legal presumption of an employment agreement as a starting point if a person has performed labour every week for 3 consecutive months, with a minimum of 20 hours a month. The contracted work in any given month is presumed to amount to the average working period per month over the 3 preceding months.

Governing law

As a rule, an employment relation is governed by the law of the country to which it is most closely connected (typically: the country where the labour is performed). In principle, parties to an employment agreement are free to choose a different law to apply to their relationship. However, according to European legislation, the effect of any choice of law in international employment agreements is limited to the extent that the employee will not lose protection on the basis of mandatory provisions of the law of any member state which would apply if no choice of law had been made.

Mandatory rules are legal provisions which cannot be contracted out. For example, many provisions of Dutch labour law regarding the termination of an employment agreement are considered to be mandatory. The parties to an employment agreement are limited to negotiations of their own terms and conditions by both Dutch labour law and any applicable collective labour agreement, since these contain many mandatory rules on terms and conditions of employment.

Employment law regulations

Employment relations in the Netherlands are mostly regulated by the Dutch Civil Code (‘Burgerlijk Wetboek’). An important principle of the employment provisions of the Dutch Civil Code is the protection of what is known as the weakest party, i.e. the employee. Apart from the Dutch Civil Code, regulations concerning labour law can be found in several other regulations and legislative acts, such as the Works Council Act and the Workings Conditions Act. As a result of the unification of Europe, Dutch regulations are increasingly influenced by European treaties and case law of the European Court of Justice. Furthermore, employment regulations are laid down in the Collective Labour Agreements.

Collective labour agreements (‘CAOs’)

As mentioned above, employment agreements are also influenced by collective labour agreements (‘CAOs’). Collective labour agreements are negotiated between representatives of employers and employees and are intended to provide consistent employment conditions within specific branches. Collective labour agreements can be negotiated for an entire branch or be limited to a company. Furthermore, the Minister of Social Affairs can impose the application of a collective labour agreement on the entire industry or sector by declaring a collective labour agreement generally binding. Any provision in an individual employment agreement, which restricts the rights of the employee under an applicable collective labour agreement, is void. In such cases the provisions of the collective labour agreement prevail.

Trade Unions

Although the influence of Trade Unions in the Netherlands is generally waning, Trade Unions are still well organised in the manufacturing industry and the semi public sector or privatised sector. The most important trade unions are the Christian Trade Union Federation (‘Christelijk Nationaal Vakverbond’ (CNV)) and the Federation of Dutch Trade Unions (‘Federatie Nederlandse Vakbeweging’ (FNV)). The main employers’ association is the Confederation of Netherlands Industry and Employers (‘VNO-NCW’).

Employment agreements

An employment agreement may be agreed for an indefinite or fixed period of time. If an employment agreement for a fixed period of time is continued, a new agreement will then be deemed to be have been entered into under the same conditions and for the same period of time (subject to a maximum of 1 year) as the former employment agreement.

Parties are free to enter into consecutive employment agreements for a fixed period of time, ending by operation of law, however two restrictions apply:

  • The aggregate duration of the consecutive employment agreements (with interruptions of not more than 3 months) may not exceed 36 months; if the aggregate duration is longer than 36 months (interruptions included), the last employment agreement shall be deemed to be an employment for an indefinite period of time.
  • The number of consecutive employment agreements must be less than 4. If the number of consecutive employment agreements exceeds 3 (while there are no interruptions of more than 3 months in between the employment agreements), the fourth employment agreement will be considered to be an employment agreement for an indefinite period of time.

Termination of an employment agreement

With respect to termination of an employment agreement, a distinction must be made between an employment agreement for a fixed period of time and an employment agreement for an indefinite period of time. There are several ways for employment agreements to terminate:

Probation period

Parties can agree upon a probation period. However, it should be noted that a probation period is subject to strict rules. A probation period for maximum 2 months can only be concluded if parties have agreed upon an employment contract for a fixed period of at least 2 years, or in case of an employment contract for an indefinite period of time. An employment contract for the limited period of less than 2 years and an employment for a specific project, where a termination date is not indicated, may only contain a probation period of 1 month. During the probation period both the employer and the employee can terminate the employment contract directly at any time. In order to be valid, the probation period has to be expressly agreed upon by parties in writing. Any deviation from the aforementioned rules will result in a void probation period.

Lapse of the agreed period

An employment agreement for a fixed period of time will terminate by operation of law at the end of the agreed period of time without formalities.

Summary dismissal

The employment agreement can be terminated for urgent cause; for instance, if the employee has committed a serious crime, such as, but not limited to, theft, fraud, etc. Before a summary dismissal can be given, all circumstances must be taken into consideration. Dismissal must be given without delay, only the time necessary for an investigation into the facts is usually allowed. The grounds for the dismissal must be conveyed to the employee at the moment of dismissal. The employment ends immediately, without notice, and the employee is not entitled to compensation. Usually, payment of unemployment benefits is denied. The courts do not easily accept that sufficient grounds are present to deem a summary dismissal valid. Before deciding on a summary dismissal, therefore always consult a legal advisor. The employee may challenge the dismissal itself within 6 months, stating that he is still employed and is thus entitled to pay. Alternatively, the employee may acquiesce in the termination of the employment, but claim damages for reasons that the grounds for the dismissal were not valid. As a risk containment measure, it is advisable to file for dissolution of the employment (see below).

Death of the employee

The employment agreement will terminate by operation of law in case of death of the employee: the family of the employee is entitled to be paid approximately 1 month’s gross salary.

Mutual consent

The employment agreement can be terminated by mutual consent. Until 1 October 2006, a termination by mutual consent bore the risk for the employee that he would not be eligible for unemployment benefit. To secure the unemployment rights for the employee, the employee was obliged to fight the termination of his employment agreement. As from 1 October 2006, the entitlement to unemployment benefits exists unless the employee him/herself has taken the initiative for termination or he/she has acted in such a way that there is an urgent cause for summary dismissal. The purpose of this policy change is to create a more flexible dismissal regime and to save costs for the employer. In everyday practice, to avoid any risks, some employees still prefer a court procedure to dissolve the employment contract on neutral grounds or a request to the Labour Office for a dismissal permit on neutral grounds (see below).

Dissolution by the Court

The Court can terminate the employment agreement through dissolution. The employer will need a sound reason to have the employment contract dissolved by the Court. Amongst others, restructuring of the company and non-performance of the employee can serve as reasons. The proceedings will take approximately 6 to 8 weeks. No notice period is called for; the court sets the termination date in its verdict (usually at a date approximately 2 weeks after the verdict). The Court can grant a severance payment to the employee in the case where the employment agreement is dissolved.

The severance payment is calculated according to the ‘Cantonal Court Formula’, which was first formulated in 1997, and has been changed as of 1 January 2009. This formula (A x B x C) takes among other things into consideration the age of the employee, his seniority within the company, his salary and which party is to blame for the dismissal.

  • A. Years of service from start until end date of employment, rounded up or down to full years. If the employee is under 35 years of age, the years of services are to be multiplied by 0.5; if the employee is aged 35 up to 45, the years of services are to be multiplied by 1; if the employee is aged 45 up to 55, the years of services are to be multiplied by 1.5; years of service completed from the age of 55 are to be multiplied by 2.
  • B. Gross monthly salary, including all regular emoluments, such as holiday allowance, thirteenth month, regular bonuses, etc.
  • C. If the application for an order terminating the employment contract is based on ‘neutral grounds’ the correction factor will typically be 1; the grounds for termination are deemed ‘neutral’ when neither the employer nor the employee is to blame for them, e.g. if the employee is made redundant as the result of a reorganization and procedures have been followed correctly. However, there may be circumstances which justify an adjustment – upwards or downwards – of the correction factor. The court may even apply a correction factor of nil if in its opinion the circumstances of the case do not justify any compensation at all, e.g. serious dereliction of duty or misconduct by the employee.

Furthermore the Cantonal Court Judges may take into consideration the employee’s position on the job market, the employer’s financial position and the position of older employees who are close to their retirement.

No appeal is possible against the decision of the Court, either to dissolve the employment contract or to grant a severance payment. This is save exceptional cases in which – in short – the Court has failed to apply the law correctly.

Notice

The employment contract can be terminated by giving notice. Employment agreements for a fixed period of time can only end by giving notice if this possibility is explicitly stated in the employment agreement. Before notice can be given, the employer needs to obtain a dismissal permit. Dismissal permits will have to be requested at the Labour Office, stating among other things the grounds for dismissal. The proceedings will take about 6 to 12 weeks. The statutory notice period that has to be observed may vary from 1 – 4 months, depending of the duration of the employment. The statutory notice period for the employee is 1 month. If the parties want to agree upon a longer notice period (for the employee to observe) than 1 month, the employer must observe a notice period of at least twice the notice period of the employee, with a maximum notice period of 6 months for the employee. For instance, if a notice period for the employee of three is agreed, the employer will have to observe a noticee period equal to at least 6 months. The employer who has obtained a dismissal permit may observe 1 month less notice period than obliged by law or contract, provided that a minimum notice period of 1 month remains effective.

Even if a dismissal permit has been obtained, notice cannot be given if the employee is ill, unless the employee reported ill after the Labour Office received the request to grant the dismissal permit. Furthermore, notice cannot be given if the employee is pregnant or is a member of a labour representative body. Although the court may dissolve the employment agreement at any time, therefore also during illness and pregnancy, a severance payment will usually be higher under those circumstances and there are also other requirements that need to be met.

Although the Labour Office cannot grant a severance payment when granting the dismissal permit, it should be noted that the employee can request the Court to grant him a severance payment after the employment has terminated stating that the termination was apparently unjust. This is called an unfair dismissal (‘kennelijk onredelijk ontslag’). Case law shows that the Courts tends to award a severance payment using the Cantonal Court Formula (see above) as a guideline and applying a deduction because in comparison to dissolution, notice takes longer (due to notice period + longer procedure). However, there is serious discussion as to whether standard compensation must be applied, or rather the actual damages must be compensated.

Working conditions

By comparison with international worker protection standards, the Dutch regulations are of a high standard. In view of an action plan of the Dutch Government (Simplifying Social Affairs and Employment Regulation), it is expected that these regulations will be simplified to bring them more in line with the international worker protection standards and to strengthen the position of the Netherlands on the international labour market.

Under Dutch law, the employer is responsible for organizing work in such a way that it protects the safety, health and well-being of the employees in accordance with a statutory set of standards and criteria. In principle, all employers are highly recommended to avail themselves of the professional assistance of a certified occupational health service (‘Arbodienst’) in respect of the implementation of a significant part of the applicable health and safety measures (for example the occupational health medical examination). Under certain circumstances, the employer’s own employees may provide this assistance, providing that they are certified to this end.

Immigration law

Workers from EEA countries (European Union, Norway, Iceland and Liechtenstein) do not need special permits to work in the Netherlands. Non-EEA nationals, however, do need work permits to work legally in the Netherlands. The prospective employee must first apply for a residence permit, and then the prospective employer must file a request with the Labour Office for a work permit. In the event of the stay in the Netherlands not exceeding 3 months, the employee will only need a short-stay visa to enter the Netherlands. In the event of the stay being longer than 3 months, the following permits are required:

  • authorization for temporary stay (MVV, ‘Machtiging tot Voorlopig Verblijf’)
  • residence permit (verblijfsvergunning)
  • work permit (tewerkstellingsvergunning); this permit is not required for so called knowledge workers.

Residence permit

An MVV visa is necessary prior to travelling to the Netherlands for a stay of over 3 months, as well as to be able to apply for a residence permit upon arrival. One can apply for an MVV visa at the Dutch Embassy or Consulate or the prospective employer can contact the Immigration and Naturalization Service (IND, ‘Immigratie- en Naturalisatie Dienst’). This authority approves requests for visas and investigates whether there is any objection against issuing an MVV visa. If there is no objection, the IND will send the visa to the Dutch Embassy in the home country. This visa must also be requested for accompanying family members.

Work permit

Non-EEA nationals must obtain work permits to work in the Netherlands. The work permit has to be applied for at the same time as the application for an MMV visa. The prospective employer has to submit a request for the work permit with the Centre for Work and Income (CWI). The abovementioned permit will be based upon the duration of the employment, as laid down in the employment agreement that is submitted by the prospective employer.

The Labour Office can issue a work permit for a maximum of up to 3 years and only in the event that there are no qualified employees available on the labour market in the Netherlands or EU. As a consequence of this requirement, the employer has the obligation to undertake all the necessary actions to find a qualified employee for the position that the prospective employee is to fulfil. There are special regulations for intercompany transfers and knowledge workers. There is no work permit requirement for knowledge workers. Knowledge workers are employees for whom the employer has shown he cannot find a suitable alternative within the EU, working on the basis of an employment agreement and earning a minimum gross income of approximately € 50,183 per annum (2010; for employees over the age of 30. For employees under the age of 30 a gross income of € 36,801 per annum is sufficient).

Author: Harry den Hond, Schagen Lensen & van Krieken Accountants, www.slk.nl