Restrictions to Employer of Record Arrangements in the Netherlands

Introduction

The Dutch authorities are proposing the implementation of restrictions around the hiring of highly skilled individuals via an Employer of Record (EOR) firm in the Netherlands. The restrictions (if implemented) will make it more challenging to resolve recruitment issues by relying on an EOR and thus avoiding the requirement of having a formal local presence established in the Netherlands. 

Impact:
High

What has changed?

Currently in the Netherlands, an Employer of Record (EOR) can act as the formal employer and sponsor for a foreign national employee entering the country under the Highly Skilled permit route. The individual will effectively be managed by a secondary de facto employer who will receive the benefit of the work completed by the individual. The EOR remains responsible for the administrative and regulatory requirements such as tax, payroll, social security and the sponsor of the employer. 

The proposed restrictions include: 

• • The EOR will only be able to sponsor the employee if the de facto employer either holds their own recognised sponsorship licence or is a start-up who do not qualify for sponsorship status.
  • EOR sponsored work permits will be valid for two years only and will not be renewable.
  • Stricter compliance requirements will apply such as justification as to why an EOR is required in place of a standard recognised sponsor and stricter government notification requirements (as yet to be confirmed by the authorities).

The proposal changes are likely to be approved; and if are, will be implemented in 2025.

Who is affected?

The proposed restrictions will impact all companies working in partnership with an EOR to facilitate the immigration and employment requirements of employees on assignment in the Netherlands via the Highly Skilled permit route. 

What you need to do:

For further information on immigration to the Netherlands, please contact the Sterling Lexicon immigration team at immigration@sterlinglexicon.com.