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Legislation On Supply Of Labour: An Update
Dutch companies now require their foreign clients to register with the Dutch Chamber of Commerce as such registration allows the Authorities to verify whether these clients have complied with labour requirements, therefore forestalling any possible fines. Taxand Netherlands investigates what action should be taken by foreign employment enterprises in light of the labour legislation.
The new Obligation to Register Intermediaries Act affects non-resident temporary employment and secondment agencies and foreign companies supplying one or more specialised workers on an adhoc basis to clients in the Netherlands. These non-resident companies must register with the Dutch Chamber of Commerce. Failure to register will result in high fines. Both the company supplying workers and the Dutch hirers risk a fine. Accordingly, Dutch clients hiring personnel from foreign companies should check whether or not the foreign company is registered. If not, often Dutch companies request the foreign company to register.
It has been recommended that foreign employment agencies, secondment companies and companies supplying specialised personnel to Dutch clients:
- Check the registration obligation with the Chamber of Commerce
- Check the contracts with clients to ascertain whether the contracts provide services or personnel
- Check whether the employment benefits and labour conditions conform with Dutch law
- Check the social security positions of the employees (A1 statements available)
- If the employment situation is uncertain (provision of services or provision of personnel), streamline contracts or discuss all potential obligations with the Dutch Tax Authorities (and all other stakeholders)
As anticipated, Dutch hirers have stopped hiring workers from non-registered companies because of possible high fines. As a result, companies (foreign and domestic) supplying one or more workers to the Netherlands have started to register with all necessary bodies. Companies should ensure their activities comply with all statutory regulations in the Netherlands to reduce the risk of double social security premiums, wage tax, penalties and fines. Such costs will immediately affect the gross margin of operating results as these potential additional costs are above the line.