Preferential Tax Schemes in the Netherlands for Highly Skilled Workers

The Dutch government has been taking steps to make the Netherlands an attractive destination for highly skilled workers by providing a preferential tax scheme for them. This scheme allows migrant workers to receive 30% of their income tax free for up to five years, helping them offset the cost of relocation and potentially higher cost of living. The program is intended to attract skilled workers to the Netherlands and keep Dutch employers competitive in a global marketplace.

The scheme only applies to workers employed by a Dutch company and is not available to Dutch citizens. For example, a Dutch expat who has been working in the U.S. and is using remote work as an opportunity to return to the Netherlands cannot benefit from the scheme.

How Does the Scheme Benefit Workers?

People who move to the Netherlands under the scheme get 30% of their income tax free for five years. The goal is to help with relocation costs and to help workers adjust to a potentially higher cost of living. It does not cost the employing firm anything.

The scheme only applies to workers employed by a Dutch company, as the goal is to attract foreign talent (not to provide tax breaks for foreign companies).

In addition, the scheme helps to protect the rights of workers who choose to move to the Netherlands and take advantage of the preferential tax scheme. The Netherlands has comprehensive labor laws that protect workers from discrimination and exploitation, and this scheme helps to ensure that workers are able to remain protected and safe in their new home.

Who is Eligible for the Scheme?

The Dutch government defines highly-skilled migrant as a person:

• Earning above a set threshold or
• Training to be a medical specialist such as a surgeon or
• Engaging in PhD level research at an institute of higher education or
• Acting as a guest lecturer

To be eligible, they also:

• Must not be a resident of the Netherlands, most of Belgium and Luxembourg, or a small part of Germany
• Must have lived outside of the Netherlands for most of the two years prior to immigration.

The last provision is to protect stipends paid to guest lecturers and conference speakers from high taxes. In addition, the person has to possess specific expertise that is scarce in the Dutch labor market, and be in an employment relationship with a firm paying payroll tax in the Netherlands.

Workers have to be sponsored by a company that remits payroll taxes in the Netherlands. This means that if an employee of a U.S. company moves to the Netherlands, they are subject to Dutch residence taxes (and immigration requirements which, as mentioned, can be tight). Being sponsored by a Dutch company also allows the worker to get residency, albeit dependent on employment.

How Does the Scheme Work?

The process for a Dutch-based company bringing in a highly-skilled migrant is:

• Apply for status as a recognized sponsor. This costs a fee and is similar to the process used by universities to sponsor students. It can take as long as three months to get status. Recognized sponsors, however, can accelerate the process of applying for a residence permit (2 weeks as opposed to 60 or 90 days).
• Find a suitable candidate and provide them with information about the conditions and how the program works.
• Start the Entry and Residence Procedure (TEV) with the IND. This typically takes two weeks and is somewhat like a background check.
• The worker receives an authorization for temporary stay (MVV) from the Dutch embassy. Some workers may not require an MVV.
• The worker travels to the Netherlands and collects their resident permit.

The worker does not need to apply for an employment permit as this is already in the application process.

Partner With an Employer of Record in the Netherlands

If your company wants to hire remote workers who want to live in the Netherlands, but you do not have an entity established there, the workaround is to partner with an Employer of Record (EOR) to legally employ those workers. The EOR will have an entity in the Netherlands, and will serve as the legal employer for tax and legal purposes. The EOR does not have control over hiring or terminations, but will remit payroll taxes in the Netherlands and act as a recognized sponsor for your highly skilled employees. This allows you to take advantage of the scheme, legally, without having to worry about all of the immigration paperwork.

Remofirst is an Employer of Record (EOR) operating in 150+ other countries, and we help you legally employ talent around the world the most affordable way, without having to establish additional legal entities.

Contact us today to learn more about how we can help you hire and manage a global, remote workforce.