In order to obtain a residence permit for employees from outside the EU/EEA and Switzerland, startups are typically limited to the highly skilled migrant scheme. This has two major downsides: a fairly high salary criterion is applicable and the employer needs to obtain the status of ‘recognised sponsor’. For foreigners of 30 years and older the salary criterion is €4,752, for foreigners younger than 30 years of age this was €3,484,- and for highly educated foreigners this was €2,497 (all amounts are gross per month, excluding 8% holiday allowance). The first two salary criterions are often too high for startups and the number of persons who meet the educational requirements for the reduced criterium is fairly limited. To solve this problem a new pilot started as of 1 June 2021.
The pilot ‘Residence permit for essential start-up personnel’ takes into account the common remuneration structure for startups by applying a lower salary criterion and on top of that, the requirement that the employee participates in the company. This entails that the employee is therefore employed as an employee but also shares in the risks, the success and the opportunities of the company. Such a manner of remuneration ensures that the employee is essential for the startup to grow or to attain a bigger market share, as no entrepreneur would give away a part of his/her company without the need to do so.
Requirements and duration
The residence permit based on the pilot is only applicable if:
- the employee has an employment agreement for working for a company;
- this company is an innovative startup with scalable business activities;
- the employee is an expert in a special field that the start-up needs in this beginning phase;
- the employee has fixed wage equal to or higher than €2,497 gross per month, excluding holiday allowance (this salary criterion is indexed each year);
- in addition to his fixed wage the employee receives a participation of at least 1% in the company via shares in the company, depository receipts for shares in the company or stock options. The employee receives the shares unconditionally at the latest 3 years after the contract has started. The right to obtain the shares must not depend on individual performance conditions.
The validity of the residence permit depends on the duration of the employment contract. But the residence permit is valid for a maximum of 1 year. Then you can have the residence permit extended. The extension is also for the duration of the contract with a maximum of 1 year. The maximum initial duration of this permit might be extended from 1 to 3 years as of 2022.
A maximum of 5 employees of the company can be ‘essential personnel’ at any given time. A 6th employee will need to apply for a different permit.
The pilot lasts 4 years. It starts on June 1, 2021 and ends on June 1, 2025. Based on the evaluation of the pilot by the Dutch government a decision will then be made if this pilot will become permanent policy or not.
A major advantage is that a startup that complies with these requirements does not have to become a recognized sponsor and therefore saves time and the legal fees for the application to become a recognized sponsor of €2,062. The other advantage is being able to pay the employee a lower fixed salary and thus keep more cash in the company to build up the business.
Is your company an innovative startup?
The assessment whether your company is deemed to be an innovative startup is made by the Netherlands Enterprise Agency (abbreviated in Dutch as ‘RVO’). The RVO will base its assessment on the business plan, prognoses and financial analysis submitted by the startup to the Dutch Immigration and Naturalization Service (abbreviated in Dutch as ‘IND’). This assessment is similar to the assessments RVO already does for residence permits for starting entrepreneurs and self-employed persons as well as for recognised sponsorship.
The assessment of RVO has a validity of 3 years, which starts from the moment that the first residence permit for essential personnel is granted.
Please note: Persons who have a share of 25% or more in the startup are not regarded as employees but as entrepreneurs and thus need a residence permit as entrepreneur. If they apply for a residence permit as a start-up entrepreneur via a collaboration with a reliable and experienced facilitator, then the RVO also already assesses whether the company is an innovative start-up. When hiring essential start-up personnel within 18 months after starting the collaboration with the facilitator the assessment that the company is an innovative start-up that was made for the entrepreneur will also be valid for the essential employees.
The partner of the employee can obtain a residence permit with the right freely work in the Netherlands for as long as the employee has a permit as essential personnel.
How can we help?
At Bol International we have direct and regular contact with both immigration specialists and experienced facilitators who work with us to guide you and your personnel through the application process.
Moreover, we can assist with the business plan, prognoses and financial analysis that you will need for the application of the residence permit as well as the set-up of your company.
We can also assist your foreign employees with the application for the 30%-ruling, a special tax facility for employees who are new to the Netherlands and lived more than 150 km from the Dutch border before coming to work here. The 30%-ruling has a salary criterion of €3.006,25 (gross per month excluding 8% holiday allowance) or a reduced criterium of €2,285.19 for employees younger than 30 years. The salary criterion is indexed every year.
We can also assist with the employment agreements, book keeping, payroll administration, annual accounts and tax returns for your company so you can focus on the business instead of the paperwork.
For more information, please do not hesitate to contact us.