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The Netherlands, sometimes known as Holland, is a nation in Northwestern Europe with Caribbean overseas possessions. It is the biggest of the Kingdom of the Netherlands' four component nations (the others being Aruba, Curaçao, and Sint Maarten). The Netherlands is a country in Europe that has twelve provinces and borders Germany to the east, Belgium to the south, and the North Sea to the north and west. It also has marine boundaries in the North Sea with both nations and the United Kingdom. In 2010, the Caribbean overseas territories of Bonaire, Sint Eustatius, and Saba were designated as special municipalities of the Netherlands. The official language of the nation is Dutch, with West Frisian serving as a secondary official language in the province of Friesland and English and Papiamento serving as secondary official languages in the Caribbean Netherlands. Dutch Low Saxon and Limburgish are regional languages (spoken in the east and southeast, respectively), but Dutch Sign Language, Sinte Romani, and Yiddish are non-territorial languages.
Amsterdam, Rotterdam, The Hague, and Utrecht are the four major cities in the Netherlands. The Hague is the headquarters of the States General, Cabinet, and Supreme Court, but Amsterdam is the country's most populated city and titular capital. The Port of Rotterdam is Europe's busiest seaport. Schiphol Airport in Amsterdam is the busiest airport in the Netherlands and the third busiest in Europe. The nation is a founding member of the European Union, the Eurozone, the G10, NATO, the OECD, and the World Trade Organization, as well as the Schengen Area and the trilateral Benelux Union. It is home to a number of intergovernmental organizations and international tribunals, many of which are centered in The Hague, which has earned the moniker "the world's legal capital."
The Netherlands literally means "lower countries" due to its low height and flat landscape, with just roughly half of its area rising above sea level and about 26 percent going below sea level. The majority of the polders, or places below sea level, are the consequence of land reclamation that started in the 14th century. The Netherlands is sometimes referred to colloquially or informally as Holland. The Netherlands reached a unique age of political, economic, and cultural splendor during the Republican period, which started in 1588, and ranked among the most powerful and influential in Europe and the globe; this time is known as the Dutch Golden Age. Its commercial firms, the Dutch East India Company and the Dutch West India Company, developed colonies and trading stations all over the globe during this period.
With a population of 17.6 million people living in a total area of roughly 41,800 km2 (16,100 sq mi), of which 33,500 km2 (12,900 sq mi) is land, the Netherlands is the 16th most densely populated country in the world and the second-most densely populated country in the European Union, with a density of 526 people per square kilometer (1,360 people/sq mi). Nonetheless, due to its abundant soil, moderate climate, intensive agriculture, and ingenuity, it is the world's second-largest exporter of food and agricultural goods by value.
Since 1848, the Netherlands has been a parliamentary constitutional monarchy with a unitary framework. The nation has a long history of social tolerance, having legalized abortion, prostitution, and human euthanasia, as well as maintaining a liberal drug policy. The death sentence was abolished in the Netherlands under Civil Law in 1870, but it was not totally abolished until a new constitution was passed in 1983. The Netherlands granted women's suffrage in 1919 before being the first nation in the world to legalize same-sex marriage in 2001. Its sophisticated mixed-market economy has the world's eighth-highest per capita income. In worldwide indexes of press freedom, economic freedom, human development, and quality of life, as well as happiness, the Netherlands ranks among the top. It placed eighth on the human development index in 2020 and fifth on the World Happiness Index in 2021.
In the Netherlands, full-time workers (40 hours a week) are legally entitled to a minimum of 20 days (four weeks) of paid vacation per year. This is calculated by multiplying the amount of hours worked each week by four. Many businesses provide more than the required number of days of annual leave, with 24 and even 32 days being common.
Employers are required to pay at least 8% of an employee's gross salary as a holiday bonus. In most cases, the bonus is paid in May or June.
There are eight official public holidays in the Netherlands.
In the Netherlands, the minimum sick leave allowance is a payout of 70% of their most recent income amount, up to a limit of two years. This is a generous privilege that reflects the social policy of the Netherlands. Some employers would also cover the entire salary.
Mothers-to-be are entitled to 4-6 weeks of paid leave before giving birth and 10 weeks of paid leave after giving birth.
If an employee takes less than 6 weeks of paternity leave before giving birth, the remaining time (up to 2 weeks) can be added to her maternity leave after the baby is born.
If the baby is born after the due date, the employee's maternity leave may begin after the actual birth and can last longer than 16 weeks.
Employers may apply to the Employee Insurance Agency on behalf of their employees for a maternity allowance (Uitvoeringsinstituut Werknemersverzekeringen, UWV).
If an employee's wife has a child, the employee is entitled to one week of paternity leave following the birth. The amount of working hours in a week is referred to as paternity leave. This paid leave can be taken at any time within the first four weeks after the child's birth. During this time off, the employer is required to pay the employee 100% of his or her salary.
Employees will now be entitled to 5 weeks of unpaid leave in the first 6 months after birth as of July 1, 2020. Employees who take unpaid leave will be entitled to demand up to 70% of their wages from the Employment Insurance Agency (Uitvoeringsinstituut Werknemersverzekeringen, UWV).
Parents with children under the age of eight are eligible for parental leave, which allows them to spend more time with their children. In most cases, parental leave is unpaid; however, certain employers may pay a portion of the salary during this period. Every week, each parent is entitled to 26 hours of vacation.
Adoption leave: 6 weeks: Employers may apply to the Employee Insurance Agency on behalf of their employees for an adoption leave payment (Uitvoeringsinstituut Werknemersverzekeringen, UWV).
Emergency leave and other short-term absence leave: intended for unexpected personal situations that require an employee to take time off right away, such as making plans for the treatment of a sick family member or a death in the family. You must always approve an emergency leave request if it is appropriate. During this time off, the employee is responsible for continuing to pay the employee's wage.
Short-term care leave: A maximum of two times an employee's working hours in a 12-month period: The employer continues to pay 70% of the employee's salary during the leave period. They pay the minimum wage if this is less than the minimum wage.
Long-term care leave: A maximum of 6 times an employee's working hours in a 12-month period: The employer is not required to continue paying the employee's wages during this time off.
In The Netherlands, the employer has generally five ways to terminate the employment agreement: termination by mutual consent or by means of a settlement agreement; termination proceedings before the Employee Insurance Agency (Uitvoeringsinstituut Werknemersverzekeringen, UWV), termination proceedings before the cantonal court, termination with the consent of the employee, or by urgent dismissal.
The length of an employer's notice period is determined by the duration of the employment contract, but is limited to four months. There will be a one-month notice period for employment of less than five years. There will be a two-month notice period for employment durations of between five and ten years. There will be a three-month notice period for employment durations of between ten and fifteen years. The notice period is four months for employees who have worked for the company for more than 15 years. An employee's statutory notice period is one month.
A trial period's duration is determined by the duration of the employment contract. It may not, however, exceed a two-month period. The employer and employee are both covered by the same period. Temporary employment contracts lasting more than six months but less than two years, as well as temporary employment contracts with no end date, are subject to a one-month probationary period. Permanent employment contracts are subject to a two-month probationary period.
Beginning on the first day of employment, an employee is entitled to a severance payment (referred to as a transition payment) in the event of an employer-initiated dismissal. For Dutch employees, the transition allowance is equal to 1/3 of their monthly salary for the first year of service beginning on the first day of work.
In the Netherlands, a standard workweek is 36 to 40 hours spread over five days. Employees are not permitted to work more than nine hours per day. A shift cannot exceed 12 hours in duration, and an employee's total weekly hours cannot exceed 60. Employees cannot work the maximum number of hours for an extended period of time; an employee cannot work more than 55 hours per week on average over a four-week period, or 48 hours per week for sixteen weeks.
Overtime is not regulated by Dutch law; it is typically agreed upon in individual employment contracts and collective bargaining agreements.
The minimum wage in the Netherlands for workers 21 and older is 1,684.80 EUR per month as of January 2021. On July 1, 2021, this rate will rise to 1,701.00 EUR. However, the minimum wage rate could change if your employee is covered under a collective bargaining agreement (CBA). To prevent misconceptions, it is best practice to specify the proper minimum pay in a formal employment contract that the employee signs before their first day.
According to Dutch pay rules, every employee in the Netherlands receives an 8% vacation allowance as a bonus. This allowance is accrued monthly, and companies typically pay it out once a year in May.
Employers in the Netherlands are obliged to pay 7% (2021) of their gross yearly income up to a maximum of € 58,311 to the Healthcare Insurance Act (ZVW or Zorgverzekeringswet). This payment is computed and paid to the Dutch Tax Department based on the employee's basic wage.
All residents and workers in the Netherlands are legally obliged to arrange for at least the basic healthcare package on their own. The cost of this basic healthcare package ranges from 95 to 125 EUR a month, depending on the employee's "own risk."
The basic health insurance package has a comprehensive framework and covers the majority of necessary medical treatment, medicines, and medical aids that are in accordance with current medical practice. The bundle includes certain physiotherapy and dental care treatments. (2016, Ministry of Health, Welfare, and Sport, “Healthcare in the Netherlands”)
All medical and other insurance allowances are taxable advantages.
In the Netherlands, employers often offer extra perks to their workers. A travel stipend for a leased vehicle or 100% of the cost of train/bus ticket for commuting is a typical perk.
In general, CIT is levied on a Dutch resident company's global revenue. Certain types of income, however, may be exempted or excluded from the tax base. Non-resident entities only have a limited tax obligation for revenue derived in the Netherlands.
The typical CIT rate is presently set at 25%. There are two income tax brackets. The first income category is subject to a reduced rate of 15% (16.5% in 2020). This tax band has been expanded to include taxable income up to 245.000 euros (200.000 euro in 2020). The standard rate is applied on any excess of taxable income. In 2022, the first tax rate will be expanded to include taxable income up to 395.000 euros.
Residents in the Netherlands pay income tax on their global earnings. Non-residents are solely taxed on income earned in the Netherlands. The Tax and Customs Administration is in charge of collecting income taxes. Income is split into three categories, known as boxes, for the purposes of calculating income tax.
Income in Box 1 is taxed at a progressive rate with two tax brackets. The lower incomes are taxed for 37.35% and the higher incomes for 49.50%. Certain expenses, known as personal allowances, may be deducted from income before taxes are calculated. Donations to qualified organizations, maintenance fees, and medical or educational expenditures are all examples of personal allowances. Taxpayers above the official retirement age are eligible for a lower tax rate.
Income from a significant stake in a business is taxed at a flat rate of 25%. A significant stake in a business is defined as holding at least 5% of its shares, options, or profit-sharing certificates, either alone or jointly with a tax partner.
Box 3 discusses wealth-based income. Wealth is measured as the value of assets (such as savings or stock options) less any obligations. Wealth-derived income is taxed at a rate of 30%. A constant return on savings and investments is assumed for tax purposes, based on the average distribution of Box 3 assets (capital mix). Predicted profits are computed each year based on historical market results. There is a tax break for capital gains.
In the case of income taxes, the tax year is the same as the calendar year. Tax returns must be filed by May 1 of the following year. Except in the case of a divorce petition, married spouses must submit a joint evaluation.
VAT, also known as the Belasting over de Toegevoegde Waarde or btw in Dutch, is levied on the supply of products and services provided in the Netherlands, as well as on importation and ‘intra-European' purchase of commodities. VAT is levied at three different rates: 21, 9, and 0%.
VAT is charged at a normal rate of 21%. The lower 9% VAT rate applies to some basic needs, certain energy-saving insulation operations on homes, and certain e-publications.
The special 0% VAT rate applies primarily to intra-EU supplies, supply of products exported to countries outside the EU, supplies of commodities stored in bonded warehouses, services provided in conjunction with the above, and some foreign services.
EU/EEA/Swiss citizens are not required to get a residence or work permit. They must, however, get a residency permit in order to be eligible for social security payments.
Nationals of the United States, Canada, Japan, Australia, and New Zealand, as well as any non-EU/EEA/Swiss foreign nationals, must get an "authorization temporary stay" (MVV) from the Dutch embassy or consulate in their home country before entering the Netherlands.
The employer must file a work permit application with the Social Security Office (UWV), demonstrating that they made every attempt to hire a Dutch/EU/EEA/Swiss national first. No candidate may work in the Netherlands until their work permit is issued.
In the Netherlands, employment contracts must be drafted and presented in the local language. They might be indefinite or for a set period of time no greater than three years. The following are the important clauses of the employment contract:
If the contract is for a certain period of time, the term
The work environment
Working hours and overtime policies
The notice period for termination
The employee's responsibilities
Whether or whether a collective labor agreement is applicable
The employment contract may include a trial period that is no longer than one month if the contract length is two years or less, or two months if the contract term is more than two years.
There is no set length for assignments. This is usually indicated in the employment contract for fixed-term employments.
Before deciding to grow to the Netherlands, you must examine numerous considerations. Begin by deciding on your industry and the sort of company you will run. Then consider any commercial agreements or ties that may be strengthened by relocating to the Netherlands. These connections may have an influence on which of the 12 provinces you pick as your headquarters. Although the laws in the Netherlands are mostly uniform, there may be minor changes depending on where you live.
Although English is recognized as an official language in the country, Dutch is the official national language. Other regional languages, such as Frisian, will also be encountered everywhere you go. Consider the languages you'll need to know to conduct business in a certain area, and if you'll need to engage a translator or staff members who understand these varied dialects.
You'll also need to examine certain Dutch subsidiary rules that may have an influence on personnel. While it is simple for European Union (EU) citizens to travel between the Netherlands and other EU member countries, non-EU or EEA people will need a residency permit (MVV) or a work permit (TWV). There are also certain regulated occupations in the Netherlands that need a recognized qualification. Employees in these positions will need this qualification before they can begin.
Following a discussion of these criteria, the Netherlands subsidiary procedure consists of the following steps:
1. Checking your company's name
2. Your Articles of Association should be notarized.
3. Getting your company and name registered with the Dutch Chamber of Commerce
4. Registration with the Trade Register and the Taxation Office
5. Establishing a company bank account
6. Employee insurance premiums
7. Conducting a risk assessment and inventory
In the Netherlands, the most frequent kind of subsidiary is a private limited liability corporation known as a Besloten Vennootschap or BV. You may also form a public limited liability business known as a Naamloze Vennootschap, or NV.
The regulations governing subsidiaries in the Netherlands differ depending on the kind of business you choose to create. A BV, for example, requires a minimum share capital of 1 EUR. At least one share must have voting rights, while another must have profit rights, or a single share might have both. BVs are likewise not permitted to issue share certificates or bearer shares. NVs, on the other hand, need a minimum share capital of 45,000 EUR but are not subject to the same limitations as BVs.