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Netherlands

Different Forms of Self-employment

It is very common for contractors in The Netherlands to be self-employed. The official designation is zelfstandig zonder personeel (ZZP) or self-employed without staff. There are different forms of self-employment:

The Dutch Junior Economic Affairs Minister has just introduced new rules to counter bogus self-employment. It was felt that the current Employment Relationship Declaration (VAR) system was open to abuse and that fraudulent applications were being made in particular to avoid social security liabilities.

The VAR system offered a guarantee that the Belastingdienst (Tax and Customs Administration) would not re-classify the employment status of the applicant as long as a VAR certificate had been issued. The only conditions were:

Most expats are aware of the 30% ruling and the fact that it is the most attractive tax break available to them when they come to work in The Netherlands. However, there is an array of rules surrounding the expatriate tax facility and this article is an attempt to bring them together and clarify them.

On the 1st of July 2012, Dutch legislation was amended in relation to the implementation of the European Employment Agency Work Directive (Directive 2008/104/EC, OJEU L327/9). One of the key features of the new legislation was the imposition of an obligation to register with the KvK (the equivalent of Companies House in The UK although it is a private company in its own right) for all entities involved in "placing personnel at the disposal of others". This is represented by the WAADI (Placement of Personnel by Intermediaries Act).

The 30% expatriate tax facility has for many years been the main motivating factor in inducing foreign nationals to accept contracts in The Netherlands. In its absence, the tax and social security costs of working in The Netherlands would in most cases be prohibitive. This is why any changes to the rules surrounding the eligibility criteria for the 30% ruling are of crucial importance to any agency doing business in The Netherlands.

I often speak to agencies in The UK who tell me that The Netherlands is the most costly or the most complicated country in Europe for expatriates to contract in. I have to disagree on both counts.

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