The Pitfalls of Contracting in the Netherlands

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When contract workers are placed on assignments in the Netherlands they need to be prepared before taking the assignment. The right visas, permits and applications (if applicable) must be in place before hand.

Here are a few key points to consider before contracting in this popular European country.

A change in legislation

Contracting is becoming more and more popular here, and nowadays, it’s very common for foreign companies to hire a Dutch resident to work for them. In this case, the employee might work from home, for example. Whether the worker is experienced or not, they are probably familiar with the laws and requirements of contracting in their own country.
However, clients often engage with those outside the country and many from the UK to help cover the variety of engineering opportunities. This means a change of scenery, a change of pace - but also a change in legislation. Dealing with the tax laws here along with other legal requirements can be a minefield, as well as confusing and time-consuming.

Which is a better payment option for contract workers?

A self-employed contractor – going it alone

The biggest difference between self-employed and PAYE (and Dutch equivalent) payment solution is the administration and social security. If the worker chooses to become a contractor directly through their own limited company, they need to make sure that they do their own invoicing and as a director, make sure their company is operating compliantly.
It would be advisable to seek guidance from an accountant when it comes to tax administration and other legal requirements. Some companies may even want workers to have a G-account, which can become a challenge when they do not have a corporate structure set-up in the Netherlands.

A G-account is a blocked bank account from which only the local authorities can access. It serves to prevent suppliers from evading payment of tax and social security contributions.

Using an umbrella payroll company

Many companies are still wary of all the administration and compliance that comes with contracting. Using a specialist payroll company helps to cut back on both the expenses and the time required to make contracting in the Netherlands work. This leaves employees and employers free to focus on their core business.

By using a payroll company, the legal administration is taken care of directly. Salary payment and invoicing are done in a timely manner, assuring that the hassle of administration is minimalised. Furthermore, most umbrella companies will indemnify recruitment agencies and corporations that are based abroad. Workers can reduce the levels of tax and social security they pay. So it’s a win-win for all parties.

To find out how Futurelink can help contracting in Europe a stress free experience, please call us on 01923 277900. If you would like further information on preparing for your assignment overseas please visit our article on Contracting abroad.