setting up a limited company in the netherlands.pdf

8/14/2019 Setting up a limited company in the Netherlands.pdf

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Setting up a company in the

Netherlands

Last modified: 7 November 2013


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Copyright Expatax B.V. 2

Table of contents

1 !o" to set up a company in the Netherlands# $

2 Legal forms of doing business %

2.1 Branch ........................................................................................................................................... 5

2.2 Subsidiary ...................................................................................................................................... 62.3 Branch versus subsidiary ............................................................................................................... 6

2.4 Partnership .................................................................................................................................... 7

2.5 Agents and distributors ................................................................................................................. 7

3 &rivate limited company: in 'utch called ()esloten vennootschap* +

3.1 Incorporators .................................................................................................................................

3.2 !eed o" incorporation ...................................................................................................................

3.3 #o$pany na$e .............................................................................................................................

3.4 Share capita% .................................................................................................................................

3.5 #apita% ta& ..................................................................................................................................... '

3.6 (inistry o" )ustice ......................................................................................................................... '

3.7 (anage$ent board ...................................................................................................................... '3. Annua% audit .................................................................................................................................. '

$ &rocedure setting up a private limited company 10

4.1 *he di""erent phases that need to be "o%%o+ed ........................................................................... 1,

4.2 #osts ............................................................................................................................................ 11

% ,nformation re-uired for establishing a limited company 11

. /sing the ) that is being formed in the startup phase to do business 11

6.1 -iss............................................................................................................................................. 11

6.2 -eco$$endations....................................................................................................................... 11

7 pening a ban account in the Netherlands 12

+ Liabilities for directors and board members of a ) 13

.1 #ode o" conduct........................................................................................................................... 13

.2 /eg%igence ................................................................................................................................... 13

.3 0isca% %iabi%ity ............................................................................................................................... 14

4 ,nsurances that you can use to minimi5e ris 1$

'.1 #o$pany %iabi%ity insurance ........................................................................................................ 14

'.2 Pro"ession %iabi%ity insurance ....................................................................................................... 14

'.3 !ebtors insurance ....................................................................................................................... 14

'.4 ""ice bui%ding insurance ............................................................................................................. 14

'.5 #o$pany da$ages insurance. .................................................................................................... 14

'.6 Business partner insurance ......................................................................................................... 15

'.7 ega% assistance insurance .......................................................................................................... 15

10 Ta6 obligations 1%

1,.1 #orporate inco$e ta& ................................................................................................................ 15

1,.2 A* ............................................................................................................................................ 16

11 rranging a "or permit in the Netherlands for your private limited company 1.

11.1 hat I/! +i%% reuire o" you "or your stay ............................................................................... 17

11.2 0riendship treaties !A0* and !)0* ........................................................................................... 1

12 &ayroll administration 14

13 8ules concerning "oring in the Netherlands 14

13.1 *he e$p%oy$ent contract ......................................................................................................... 1'

13.2 *e$porary e$p%oy$ent contract ............................................................................................. 2,

13.3 Per$anent e$p%oy$ent contract ............................................................................................. 2,

13.4 *ria% period ................................................................................................................................ 2,

13.5 #ontract +ith an agency ........................................................................................................... 21

1$ 9oring conditions 21


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14.1 oring ti$e............................................................................................................................. 21

14.2 *he "ourday +ee ..................................................................................................................... 21

14.3 Annua% ho%iday .......................................................................................................................... 21

1% 30 ruling 22

15.1 -euire$ents ............................................................................................................................ 22

1. bout ;6pata6 23


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1 !o" to set up a company in the Netherlands#

A lot of foreign companies or individuals would lie to start a !usiness in the "etherlands. #eason for

this could !e the availa!le infrastructure resulting in a good connection with the rest of Europe$ the

availa!le worforce$ the tax laws$ and the a!ility to communicate in English.

Although the system in the "etherlands seems flexi!le specific procedures must !e followed. %hese

procedures may re&uire some time$ so it is important that the right solution is chosen and that all

re&uired information is availa!le on re&uest.

'n this !rochure we will explain some of the rules involved and our fees if you would lie us to assist

you. (art of the text is copied from our we!site where you can find a lot more information.

'f you have any &uestions )ust let us now.

Expatax B.V.

*ei+erstraat 3

3,-2 EA trecht

%el. /3- 01 31 24 , 3

Correspondence address5

(6 Box 73-1

3,1 89 trecht

*nowledge Base5 http5::www.expatax.nl:!

Author5 Ar)an Enneman


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Copyright Expatax B.V. ,

2 Legal forms of doing business

A company can !e engaged in !usiness in the "etherlands via a su!sidiary or !ranch. Compared with

other E countries$ in the "etherlands corporate law provides a very flexi!le and li!eral corporate

framewor for the organisation of !ranches and su!sidiaries !y non;resident companies or

individuals. %here are no special restrictions on foreign;owned companies starting a !usiness in the"etherlands$ nor are there restrictions on foreign ownership of land or on repatriation of capital and

profits.

2.1 Branch

%he organisation in the "etherlands of a !ranch of a foreign company does not re&uire prior

governmental approval. %he foreign head office only needs to file certain documents and information

with the trade register of the Cham!er of Commerce in the district where the !ranch will !e located.

%he following particulars have to !e disclosed5


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2.2 Subsidiary

=utch law distinguishes two types of limited lia!ility companies5 the pu!lic limited lia!ility company

0"aamlo+e Vennootschap or ".V. and the private limited lia!ility company 0Besloten Vennootschap

or B.V.. %he main differences !etween these two entities are that5

0a B.V.?s 0as opposed to ".V.?s cannot issue share certificates evidencing the shares and cannotissue !earer shares>

0! the transfer of shares in B.V.?s 0as opposed to ".V.?s can !e su!)ect to the !locingprovisions of the Articles$ which !locing provisions may contain a prior approval of the

general meeting of shareholders or another corporate !ody as designated under the

company?s Articles of 'ncorporation$ or a right of first offer to the other shareholders> and

0c BV?s can !e formed with a minimum share capital of @ - 0i.e. there should !e at least oneshare with voting rights and one share with profit rights$ while ".V.s must have a minimum

share capital of @ 4,$111.

A =utch su!sidiary may !e esta!lished and owned !y one or more shareholders. %he shareholdersmay !e either individuals or legal entities> their nationality is irrelevant. 'f the shares in the company

are owned !y only one shareholder$ any agreement !etween that shareholder and the company

must !e in writing. hareholder resolutions must also !e in writing. 'n addition$ such a company is

o!liged to file the name and domicile of the sole shareholder with the trade register of the Cham!er

of Commerce in the district where the company is situated. B.V.?s are$ in most cases$ the !est vehicle

for a foreign company to esta!lish a wholly owned =utch su!sidiary.

%he issuance and transfer of registered shares or the transfer of a restricted right to the shares 0for

instance$ a pledge must tae place !y means of a notarial deed drawn up !efore a civil;law notary

authori+ed to practice in the "etherlands. %his o!ligation does not apply to ".V.?s whose shares or

share certificates are listed.

2.3 Branch versus subsidiary

%he most important legal difference !etween a !ranch and a su!sidiary is the difference in exposure

to lia!ility. A su!sidiary has limited lia!ility$ as a result of which a shareholder is lia!le only to the

extent of its capital contri!ution. A !ranch is not a separate legal entity$ so the 0foreign company of

which the !ranch forms a part is fully lia!le for all the o!ligations of the !ranch. A !ranch is easier to

esta!lish than a su!sidiary.

etting up a su!sidiary has the following advantages.

Because the su!sidiary and the parent company are distinct legal entities$ the parentcompany is not exposed to any lia!ilities of its su!sidiary. %he lia!ility of the =utch su!sidiary

is limited to its own assets. By contrast$ a foreign investor is always lia!le for the activities of

its =utch !ranch. %his means execution of the !ranch?s lia!ilities can !e enforced at the

expense of the foreign investor?s assets$ even if these are located a!road. o in light of ris

management setting up a su!sidiary will limit the lia!ility.


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Copyright Expatax B.V. D

Annual tax filing re&uirements are less stringent for su!sidiaries than for !ranches. A!ranch?s annual filing will reveal financial information a!out the foreign entity that it may

prefer to eep confidential.


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3 &rivate limited company: in 'utch called ()esloten vennootschap*

A !esloten vennootschapF 0B.V. is a company limited !y shares$ whose shares are privately

registered and not freely transfera!le.

3.1 Incorporators

A B.V. may !e incorporated !y one or more incorporators$ !eing either individuals and:or legal

entities. 6ne single individual or entity alone$ whether =utch or foreign$ may !e the only

incorporator and full !oard of management at the same time> no secretary is needed. 'f there is only

one shareholder$ this fact will not entail personal lia!ility$ !ut his name will !e registered as such in

the certificates of registration of the B.V. issued !y the trade register. Each incorporator shall

contri!ute to the initial capital for a certain num!er of shares. hareholdings are registered in the

shareholders register that must !e ept in the office of the company.

'f the shareholder is an individual please loo into the rules concerning residence and wor permits.

'f you are not living in the E or in the $ the =utch government may not grant a permit to anindividual who is the main shareholder 0more than 2,H.

3.2 Deed of incorporation

%he deed of incorporation will !e executed !efore a pu!lic notary and filed at the trade register. %he

official deed of incorporation shall !e in =utch> it contains firstly 0personal details of the

incorporator0s and the initial mem!er0s of the !oard$ as well as the amounts of their

participation0s and payment0s to the initial capital.


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3.5 apita" ta#

%ill - Ianuary 211 capital tax was !e due from the company on incorporation and on any

su!se&uent issuance of shares$ at a rate of ,., per mil of the issued capital or of the paid up capital$

whichever is greater. After - Ianuary 211 the capital tax has !een reduced to +ero.

3.$ %inistry of &ustice

%o reduce the administrative !urden a certificate of no o!)ection from the Jinistry of Iustice is no

longer re&uired since - Iuly 21--. Before this date the Jinistry of Iustice had to agree upfront with

every formation of a limited company !y its shareholders.

'nstead a different procedure was introduced$ !ut this doesn?t mean that the esta!lishment of the

BV is no longer monitored. %here is now a more informal procedure in cooperation with the pu!lic

notary. %he Jinistry of Iustice will monitor the company in the !acground after its formation.

3.' %anage!ent board

%he management !oard has unlimited powers to act for the company$ as do the individual !oard

mem!ers unless restricted !y the articles in the articles of association. %he only restriction allowed$

however$ is to re&uire )oint signatures. %herefore$ if one wishes to grant limited powers to a director$

he or she should either not sit on the !oard$ or only !e granted )oint powers after which the !oard if

desired can supplement these powers with any type of standing or specific power of attorney

granted to the same director$ in addition to his statutory powers. %he only case where a !oard

mem!er will !e precluded from validly representing the B.V.$ is when he has a personal interest in a

specific transaction$ unless the articles of association overrule this restriction. sually$ the !oard is

appointed for an indefinite period. After incorporation$ the authority to appoint and discharge

mem!ers of the management !oard rests with the general meeting of shareholders$ unless suchauthority has !een vested in a supervisory !oard in which a wors council is represented. A B.V.

however can do without a supervisory !oard$ as long as it employs less than ,1 worers in the

"etherlands.

3.( Annua" audit

%he B.V. must maintain an administration in the "etherlands$ prepare annual accounts and file a

corporate tax return each year. Expatax can assist with this. After incorporation we will provide a

&uotation for our accounting and tax services.

An audit must !e performed !y external auditors when the companys turnover exceeds @ D millionand !alance sheet totals over @ 3., million. o if turnover and !alance sheet are !elow these

amounts an audit is not re&uired. 6ur accountants will eep you informed.


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$ &rocedure setting up a private limited company

Expatax can assist you if you would lie to set up a limited company in the "etherlands.

4.1 )he different phases that need to be fo""o*ed

&hase 1: preparation phase

%hin a!out a name for your company. =ecide who will !e the shareholder0s and what will !e the amount of the share capital. %hin a!out an address in the "etherlands$ Expatax can also arrange an address for the

company with a =utch !usiness centre.

'nform Expatax a!out your intention to set up a limited company. 'f you are in the "etherlands a personal meeting can !e arranged.


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7 pening a ban account in the Netherlands

'f you want to do !usiness in the "etherlands you may want to open a !an account for the B.V. Mou

can also use a foreign !an account if you wish. Especially with the new E(A rules it will !ecome

easier to use a foreign !an account. A =utch account however may !e preferred.

As a starting !usiness there are different !ans that you can contact to open a !an account. 9ere is

a list of the re&uirements of AB" AJ#6$ which we are going to use as an example of how to open a

!usiness account. %hose re&uirements generally also apply to other !ans lie #a!o!an and '"8.

the articles of association 0deed of incorporation.


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+ Liabilities for directors and board members of a )

As a starting !oard mem!er you will have to !e aware of what you can and cannot do when starting

your B.V. %he =utch government has certain provisions when it comes to starting a limited company

and it is really important to uphold those provisions when it comes to running the company to

prevent future riss of lia!ility when dealing with the following situations5 !anruptcy$ contractualdisagreements or fiscal pro!lems.

(.1 ode of conduct

All the lia!ilities are to the limited B.V. when it can !e shown that the limited company was directed

correctly$ the administration ept accordingly and law provisions are met. %he !oard of directors

should have handled in accordance with the good governance code. Article 257$ of the =utch Civil

Code$ re&uires directors to fulfill their duties towards the legal entity with due care and attention.

hould they fail this duty of care$ the directors are personally lia!le for any damage caused to the

company as a result thereof. %he =utch upreme Court has ruled that such is the case if the directors

have acted in a manner that constitutes serious misconduct. %he upreme Court stated that if theactions of the directors held lia!le would not have !een taen !y any other reasona!ly acting and

experienced director in their stead$ this constitutes serious misconduct. Examples of circumstances

wherein directors have !een held lia!le !y their company are5

- =iverting the company?s funds for personal use>- ; %aing large and unsecured financial riss.

(.2 -eg"igence

'n some cases if it can !e proven that the !oard of directors has !een negligent$ it is possi!le for asupplier 0or any 3

rdparty to sue an individual !oard mem!er for not anticipating the possi!le

financial state of the company which means that the !oard mem!er may have to pay the !ill that is

still outstanding and the lawyer fees of the opposing party. %his is in accordance with the =utch civil

code !oo 2$ article 213$ of paragraph 4.

'n the situation of a !anruptcy the law states that on the !anruptcy of a company limited !y shares

0B.V.$ each director shall !e )ointly and severally lia!le to the !anruptcy estate for the amount of

the company?s de!ts that can?t !e satisfied out of the li&uidation of its assets if the management has

manifestly performed its duties improperly and it may !e assumed that these actions constituted an

important cause of the !anruptcy. %he law automatically holds that the directors have performed

their duties improperly in the following circumstances5

- the management has not filed the company?s accounts within -3 months of the end of thefinancial year>

- the !oos and accounts of the company have not !een ept in accordance with goodaccounting practices and do not provide a true insight into the financial position of the

company.


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(.3 isca" "iabi"ity

=irectors of a =utch company$ such as a B.V. or an ".V.$ can also !e held personally lia!le for unpaid

tax de!ts of the company$ in such cases where the directors have not reported the ina!ility of the

company to pay to the tax authorities. %his form of lia!ility regards taxes such as wage withholding

tax and VA% 0NB%LN$ owed !y the company to the =utch tax authorities. 6nce the tax authoritieshave made a director lia!le for overdue taxes imposed on company$ it is up to the director to prove

that the tax de!t was left unpaid for reasons not attri!uta!le to him.


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/.$ Business partner insurance

't is often the case when the !usiness partner passes away or is seriously ill$ that the family mem!ers

have the right to tae part of the company over. 'n some cases the existence of the company can run

some ris. %o prevent the ris of the company !eing split up$ there is insurance$ it is called Business

partner insurance that insures that when the !usiness partner passes away the insurance will givethe surviving !usiness partner a money amount to !uy the remaining share of the company.

/.' ega" assistance insurance

Lith a legal assistance insurance$ you get insured for legal assistance when you in disputes with

employees$ suppliers$ government or !usiness partners.

10 Ta6 obligations

6nce the B.V. is esta!lished it will also !e registered with the tax authorities so that the necessary tax

num!ers can !e issued to the B.V. %he B.V. has certain o!ligations and needs to file several taxreturns.

An administration must !e set up and ept up to date. VA% returns must !e filed 0normallyevery &uarter. Annual accounts must !e prepared including a pu!lication report for the

Cham!er of Commerce. %he accountants of Expatax can tae care of this for you.

A corporate income tax return must !e filed every year. %ax year is 0in principle the calendaryear. %he tax advisors of Expatax can prepare the tax return for you.

Lage tax returns must !e filed when employees are hired. %he payroll managers of Expataxcan arrange this for you.

1.1 orporate inco!e ta#

Corporate income tax is levied on companies esta!lished in the "etherlands 0resident taxpayers and

on certain companies not esta!lished in the "etherlands$ which receive income from the

"etherlands 0non;resident taxpayer.

Basis of the assessment are profits in the widest sense$ with a num!er of additions or deductions.

%he determination of the taxa!le profits corresponds largely with the determination of profits

taxa!le under personal income tax$ including the deducti!ility of losses from other years.

egal persons whose activities are of a social or charita!le nature or otherwise in the pu!lic interest

are exempted from corporate tax. Exempted categories of profit are those corresponding to the

relevant exemptions under personal income tax.


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results of the others. 'nterest paid to a group company in respect of the ac&uisition of shares in

=utch operating companies cannot !e set off against the profit of these operating companies.

%he tax amount is assessed annually !y the tax authorities on the !asis of the taxpayers tax return. 'f

no such tax return is su!mitted$ the amount due is assessed directly !y the tax department.

%ax rate for21-35 21H over the first @ 211$111$ 2,H over the rest.

1.2 A)

%he value added tax system in the "etherlands corresponds with that currently used !y all other E;

states. %he following transactions are su!)ect to VA%5

the provision of goods and services !y !usinesses within the "etherlands> intra;community purchases of goods in the "etherlands in the course of !usiness operations

!y entrepreneurs and corporations>

intra;community ac&uisitions of new means of transport> imports of goods from outside the E.

%he tax is levied on the sale price and the general rate is 2-H. A lower rate of H applies for certain

goods and services$ such as food products$ !oos$ medicines$ art$ anti&ues$ entry to museums$ +oos$

theatres and sports. Visi!le exports are +ero;rated. A num!er of exemptions apply for special goods

and services such as educational$ medical and cultural services.

Companies may deduct VA% paid on purchases and other !usiness expenses from the VA% paya!le on

their sales. 'f an exemption applies$ VA% payments are not deducti!le.

VA% returns are normally filed per &uarter. 'f the turnover is high the filing period can !e changed tomonthly. %he period can also !e changed to yearly of the turnover is very low. %he tax authorities will

send an invitation to file a VA% return every period. Expatax can tae care of the VA% returns for you.

11 rranging a "or permit in the Netherlands for your private limited company

As a shareholder or executive of your private limited company you might want to consider moving to

the "etherlands. 'f you are not a resident of the E$ the !est thing to do is to first go to the '"= 0their

we!site is5 http5::www.ind.nlO go to the #esidence Li+ard. 6n the we!site you will find everything

you need now to !e a!le to apply for your stay in the "etherlands. %hings you will find on the

we!site are5 needed fees for the different procedures$ re&uirements your !usiness needs to fulfil in

order to !e a!le to apply and if your type of !usiness is of added value to the "etherlands.

Lhen you want to stay in the "etherlands for more than 3 months$ for what is considered long

stayF as an independent entrepreneur$ you should apply under this category5 JVV 0provisional

residence permit.


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11.1 hat I-D *i"" reuire of you for your stay

%he '"= will see if you meet these conditions5

applicant must not constitute a ris to the pu!lic. applicant should not !e suffering from tu!erculosis. applicant should have sufficient funds to esta!lish a !usiness in the "etherlands and

maintain living.

applicant must !e !elow the age of 1 years. applicant must meet the specified re&uirements for practicing his:her profession in the

"etherlands.

applicant must start a new company in the "etherlands. applicants !usiness activities should !e which can support =utch economic purpose. applicant must live in the "etherlands to control and run his:her proposed !usiness

activities.

=ocuments that you will !e ased to !ring to the consulate:em!assy:'"=5

valid passport. legalised !irth certificate of the applicant. declaration of !acground duly signed. proof of the applicants 'nternational 9ealth 'nsurance with coverage in the "etherlands. two passport si+ed photographs. documentary evidence that the applicant will !e woring in the "etherlands as an

independent entrepreneur.

copy of the documents showing that the entrepreneur is authorised to run a !usiness in the"etherlands 0where applica!le.

if registration is compulsory5 documentary evidence from the cham!er of commerce notolder than 3 months.

copy of the !usiness plan of the applicant$ containing5 information on the applicantspersonal details$ his:her family and income situation$ financial commitments$ his: her

education: training and professional experiences.

6ther !usiness related information which you will have to have to explain5

!usiness 'nformation5 sector in which the applicant will !e operating$ starting date of the!usiness location of the !usiness and other such related details.

commercial aspect of the applicants !usiness5 description of the type of company andproducts$ the innovative ideas thereof and the mareta!ility 0including target groups and

competitors.

legal aspects of the !usiness5 legal form of the company$ trade name$ lia!ility$ licencesre&uired to start the !usiness$ insurance and delivery terms P conditions.

financial aspects of !usiness5 financial plans$ investment !udget$ repayment plan$operational !udget and li&uidity forecast.

management aspects5 description of the organisation including the si+e of the staffcomplement.

proof as to what maes the applicant to go to the "etherlands in order to run the !usiness. proof that the applicants company is a new company.


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6ther re&uirements5

if the applicants company is a pu!lic limited company$ private limited company orpartnership firm$ copy of the deed of incorporation showing the authorities and

responsi!ilities of the partners and their profit sharing arrangements.

if the applicant is an independent freelancer5 copies of the contracts with =utch clients forthe preceding year. proof of registration with collective industrial or professional organisations 0if applica!le. proof from the concerned department showing that the entrepreneur has a VA% o!ligation 0if

applica!le.

copies of purchase or lease contracts of the !usiness premise 0if applica!le. financial forecasts duly drafted !y a chartered accountant 0if applica!le.

%his can !e done from your home country or depending if your country needs visa for your stay or

not you can do it from the "etherlands. 't is advisa!le to have legal support when going through

these proceedings$ in order to help you go through the different processes.

11.2 riendship treaties6 DA) and D&)

%he =utch American 2. a !usiness plan demonstrating commercial activities in the "etherlands>3. a financial report$ prepared !y a &ualified accountant or tax advisor>4. a valid passport valid for at least one year from the application date>,. health insurance>. su!stantial personal capital invested in the !usiness. Borrowed funds are not considered.

%he amount of capital re&uired is determined on a case;!y;case !asis.


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12 &ayroll administration

6nce your company is registered in the "etherlands and you start employing staff here$ you must

deduct payroll tax from their salaries. (ayroll tax consists of wage tax$ social insurance contri!utions

and income;dependent Care 'nsurance Act contri!utions.

'f you employ staff$ the following must !e done.

%he company must !e registered as an employer with the tax authorities. %hey will issue awage tax num!er and provide the re&uired forms. %he wage tax num!er must !e used in all

contacts with the tax authorities.

Mou as your employee to provide you with a written statement including at least thefollowing data5

; surname and initials>

; address$ postcode and place of residence>

; country and region of residence>

; date of !irth>; citi+en service num!er 0B" or tax and social insurance num!er 0sofinummer.

Mou verify and record each employee?s identity. 'n the case of a foreign worer$ you mustalso chec whether he or she is permitted to wor in the "etherlands.

Mou create a payroll administration. Mou determine the elements of the employee?s wage and calculate the correct contri!utions

and taxes.

Mou file a tax return on time and pay the contri!utions and taxes. %he tax authorities willinform you a!out how and when to file returns.

'f you or your employee fails to comply with the o!ligations relating to payroll tax or the verification

of the employee?s identity$ you will have to apply what is nown as the anonymous person rateF0anoniementariefF. %his is the maximum tax rate without any tax credits.

Expatax can assist you with the whole procedure and tae care of your payroll administration$

including the creation of employment contracts$ application of the31H ruling and advice a!out the

applica!le tax allowances.

13 8ules concerning "oring in the Netherlands

13.1 )he e!p"oy!ent contract

%he legal rights and o!ligations differ per type of contract$ so you have to consider what option

suites you most. %o help you mae this decision$ the !asic principles of the different contract options

are explained !elow.

%here are three rather common employment contract options. %hese are5

; temporary employment contract>

; permanent employment contract>

; contract with an agency.


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13.2 )e!porary e!p"oy!ent contract

An employment contract !etween the employer and employee is nothing more than an agreement

!etween !oth parties. %he employee o!liges him or herself to wor for the employer and the

employer o!liges him or herself to pay a salary for the wor delivered !y the employee. A temporary

contract has a starting date and an ending date. %he contract will end on the agreed date without adismissal procedure.

Le strongly advice that the contract is in writing$ although a ver!al agreement is also valid. %he

employer has the o!ligation to inform the employee a!out the main issues covered in the

employment contract. Lithin the legal limits and applica!le Collective a!our Agreement$ employers

and employees are free to decide what will !e covered in the employment contract.

A temporary employment contract will end automatically and legally on the date agreed. %his means

that there is no dismissal procedure involved. A different situation occurs if either parties or one of

them want to end the contract !efore the agreed date. 'n this case the option for termination of the

contract !efore the final date$ need to !e part of the contract. 'f the employer wants to end thecontract !efore the date agreed$ a legal dismissal procedure must !e followed.

'f repeating temporary contracts are used$ the rules for a permanent contract can apply 0if four

temporary contracts with the same employer have !een agreed within less than a three;month

!rea !etween each contract.

13.3 Per!anent e!p"oy!ent contract

%he most important difference !etween a temporary employment contract and a permanent

employment contract is the fact that a permanent employment contract has no ending date

0including no indication or any other intention to limit the duration of the contract ; such as Qfor theduration of the pro)ectQ. %his means that the item Rthe day the contract will end? included in the

temporary employment contract will not !e part of a permanent contract.

A permanent employment contract can !e ended !y one of the parties. %he legal terms of notice

timeF need to !e respected. %he rules are different for employers and employees. %he employee has

the legal right to end the contract without a procedure$ !ut he or she has to respect the legal and

agreed termination period$ which usually is a one;month notice minimum. %he employer needs to

apply for a dismissal permit. %he term of notice depends on the duration of the contract on the day

the employer applies for the dismissal permit.

13.4 )ria" period

%he trial period is a very common part of an employment contract. A trial period will apply for !oth

parties and needs to !e agreed in writing. 'f the duration of the contract is less than 2 years$ the

maximum trial period is - month. Exceptions can only !e made in case this is agreed !y a Collective

a!our Agreement. 'n any way the legal maximum trial period is never any longer than 2 months. An

extension of this period is not possi!le.


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Copyright Expatax B.V. 2-

13.5 ontract *ith an agency

%he contract with a temp agency or commercial employment agency 0Quit+end!ureausQ differs

fundamentally from a contract with the employer as descri!ed a!ove. 'n the temp construction the

temp agency is the legal employer. 'n particular the protection against dismissal during a certain

temp period will not !e arranged. %his on the other hand means that also the employee is free toleave during the same period of time. %emp agencies have their own Collective a!our Agreement.

%here is an QAllocation of Lorers !y 'ntermediaries ActQ which regulates certain issues related to

temp agencies.

1$ 9oring conditions

14.1 or,ing ti!e

%he law lays down a maximum woring time of -2 hours per shift and 1 hours per wee 0over a

period of 4 wees maximum ,, hours on average per wee and over a period of - wees maximum

4 hours on average per wee.%he average woring wee is 41 hours. %he woring wee is usuallyorganised over five days$ with a mandatory legal minimum of one day of rest$ normally unday.

(ersons$ whose religion o!serves a day of rest on another day than unday$ may opt for


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%o reduce this ris insurance companies have created several policies to cover this ris. 'n case of

illness the insurance company will then tae over the payment of the salary. %he height of the

premium depends on what will !e insured. #elevant is the salary$ the period the employer will

continue the salary himself 0one month$ two months$ the num!er of employees etc.

Besides the ris of having to pay the salary during illness the employer will also have to pay thepremiums for the state disa!ility insurance 0plus for the state health insurance if applica!le.

#oughly said$ the extra costs for the employer will !e --1H of the agreed gross salary. 6n top of this

the employer can pay a premium for a private illness insurance$ pension premium etc.

1% 30 ruling

!. the amount of the tuition fees. %uition fees are payments for children of the extraterritorial

employee to participate in primary or secondary education at international schools and international

departments of non;international schools$ up to the amounts charged !y the school according to its

rates for education$ with the exception of costs and accommodation expenses !ut including

travelling expenses.

Expatax can assist with the application procedure.


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1. bout ;6pata6

Expatax was set up in 211- and has grown to a fully licensed tax and accountancy firm employing

several &ualified advisors. %hese advisors come from Big 4 firms$ have a solid !acground and are

interested in the client. (ermanent education is part of our policy$ which means that our advisors

stay up to date.

Le are speciali+ed in assisting expatriates and foreign !usinesses who want to wor and do !usiness

in the "etherlands.

6ur approach is very personal and direct. ines are short and we do all we can to find a solution

around the client?s needs. By focussing on the international tax advice we can eep our nowledge

high$ the procedures clear and the fees reasona!le.

=ue to our client !ase all our outgoing correspondence lie tax reports$ annual accounts$ etc. are

prepared in English. pecifications are provided so that you can see exactly what we have done and

what the result will !e.

ervices

Besides assistance with the preparation of a tax return we provide the following services5

application of the 31H ruling 0www.expatax.nl:31SpercentSruling

setting up a company in the "etherlands 0www.expatax.nl:starting!usiness

accounting 0www.expatax.nl:!ooeeping

providing payroll solutions 0www.expatax.nl:payroll;administration

financial planning 0www.expatax.nl:financial;planning

Cooperation?s

Cooperation?s have !een set up with other speciali+ed advisors5

activpayroll td5 worldwide payroll solutions

Ve=eVe legal5 international la!our law$ pension rights and social security

Berenhout


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setting up a limited company in the netherlands.pdf

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