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Careful contractors, MVV isn’t a shoo-in to work in the Netherlands

A so-called ‘long stay visa’ for the Netherlands, the MVV, is being bandied about as shoo-in for Britons longing to work in a traditionally contractor-friendly country, but some context – and caution – is advised, writes Kevin Austin, managing director of Access Financial.

Setting the record straight

First and foremost, despite some suggestions to the contrary – specifically by recruitment agents, the MVV visa does not allow a British person to simply take up paid employment or self-employment in the Netherlands.

The latter is quite an involved application process that requires a Briton’s business idea or project to accumulate 90 points in the eyes of Dutch officials. More positively, it is at least true that a freelance professional in the UK who wants to work in the Netherlands can work either as a sole trader or through a limited company.

30% ruling doesn’t cover the self-employed

In the case of the sole trader, the income from the business activity is subject to Dutch social security and taxes from the start. But the so-called ‘30% ruling,’ which lets employees recruited from outside the Netherlands not pay tax on up to 30% of their salary, is not available to the self-employed.

If you want to work through a limited company as part of working in the Netherlands, you must register the company with the Netherlands Chamber of Commerce, the ‘KvK.’

While that’s a bit like Companies House the UK, unlike the UK the company director must draw a salary of at least 75% of the net income or the market rate for the job, whichever is higher. Then, Dutch income tax and social security are due on that figure. 

Mentioned above, the 30% ruling is available in such cases — provided that you meet the criteria, which includes a minimum income level and rather oddly to some, where you were when you received the job offer.

HMRC complexity

Assuming you proceed, your company will become subject to Dutch corporation tax if you stay in the Netherlands. This will lead to complexity with HMRC if you use a UK limited company. Contractors often deem this to be a hassle that they do not want, in which case they tend to opt for using a Dutch limited company — a ‘BV.’ However, the cost of setting up and running a BV needs consideration. 

To help with costs, some contractors will try to use the 30% ruling. But if you want to apply, the opportunity/ work opening/ vacancy must be found before you go to the Netherlands. Related, you must not have been resident in the country before then.

From all other points of view, it makes no difference when you find the assignment, as it is possible to apply in the country in the first 90 days of being there. You can, of course, make the application before you arrive in the Netherlands. 

Freelance-friendly? The Netherlands was – once

At the outset, I spoke of the need for caution. The popular impression of the Netherlands is that the nation is freelance-friendly.

However, the abolition in 2016 of the VAR (declaration of independent contractor status) certificate, and the introduction in 2020 of the Balanced Labour Market Act, unfortunately diluted that freelancer-friendliness.

The result of both has been that freelancers working through labour-leasing companies pay higher social costs and must contribute to an Adequate Pension in the region of 14-15% of their salary. Regular employers need not offer a pension at all! These changes have had the desired effect of skewing companies into recruiting themselves rather than using contract workers, thereby damaging labour market flexibility. 

Finally, KMR probably still has the edge on MVV

In the past 12 months, we have seen very little change in the number of applicants wishing to work in the Netherlands. It is still a popular market. Of course, there has been a decline in the number of Britons who come to us to execute a Dutch contract, mainly because all Britons now require residence visas, which was not the case before Brexit.

The wait deters clients and workers for a visa – and that’s true of MVVs, too, even though they may qualify for Knowledge Migrant Worker (KMR) status.

KMR remains the most common way to live and work in the Netherlands because it is based on salary rather than education or professional experience.

Monday 13th Feb 2023