In a country such as the Netherlands, with an enormous amount of skilled personnel, the recruitment business is almost always booming. This might offer some interesting opportunities for people who have a talent for finding the right people for the right job. If you are interested in the possibilities of opening a recruitment company in the Netherlands, please read on for more information about the benefits, the procedure of registering as an employer and some extra information about Dutch wage and payroll taxes.
Necessary skills and experience to open a recruitment company
The recruitment business, especially in the Netherlands, is incredibly competitive. Since there are so many qualified, highly educated and generally bilingual people in the country, including expats, there is always a high level of supply and demand within this sector. This means that any new recruitment company will have to stand out from the crowd, in order to make a real shot at success. The best way to do this is by either specializing in a very specific sector, or be highly skilled in connecting potential candidates and businesses. A combination is preferable, but either way you will need to put some work into the company if you want it to flourish.
Some standard skills that owners of recruitment companies often share are commercial instinct, an extrovert personality, having a high amount of ambition and socializing skills, determination and a positive attitude. If you want to focus on a specialist sector or one with highly qualified personnel, then it is also advisable that you have finished a university degree yourself. This makes it much easier to match and acquire projects.
Benefits of owning a Dutch recruitment company
Since the digitalization of society, it has become much easier to work from a remote location. Almost every sector benefits from a more digitalized approach, this goes for recruitment companies as well. There is not an immediate need anymore to own a physical office in the Netherlands, since you can execute the entire recruitment process from your own current location. Interviews can nowadays be done via platforms like Skype and Zoom, next to that the entire documentation process can be digitalized. The only important factor is ownership of a Dutch company with a registration address. This is mainly due to the taxes you will have to pay when you hire personnel, next to corporate and income taxes.
Registration as an employer in the Netherlands
If you want to start a company in the recruitment business, you will need to register as a Dutch employer. This obligation basically starts the moment work is being performed by employees, because that moment the obligation to pay Dutch income tax and social security premiums starts as well. If an employer has a taxable presence in the Netherlands, officially registering as an employer and maintenance of a payroll is obligatory. A taxable presence means the company either has a permanent establishment or a representative in the Netherlands.
Dutch payroll taxes
If you are going to pay salaries, then there will also be Dutch payroll taxes involved. The Dutch payroll tax is named “Loonheffing” in Dutch and is collected monthly as a withholding tax. This means, that you pay the required percentage every month to the Dutch Tax Authorities and other applicable institutions. During the next year, the employee will have to send in their income tax declaration. At that point, the tax authorities will do a calculation and either pay the employee overpaid funds back, or collect a possible deficit. In any case, this tax consist of several components:
- Dutch wage tax
- National social insurance contributions
- Employee insurance contributions
- A Care Insurance Act contribution that is income dependent
Dutch wage tax
The Dutch wage tax is essentially a tax payment that is paid in advance for the Dutch income tax. The tax withholding system in the Netherlands has been instated as a safeguard for taxpayers, in order for them not having to pay a very large amount of taxes once per year. Instead, wage tax and social security contributions are levied every month, by being subtracted from an employees monthly salary. This way of dealing with tax also provides the Dutch Tax Authorities with substantially more certainty that income tax will indeed be paid and reported by taxpayers.
The wage tax is calculated with multiple withholding tables as a basis. That take into account several distinct factors such as:
- The age of the employee
- The current progression of the Dutch income tax rates
- Standard tax deductions and allowances
If an employee has non-periodical salary components such as bonuses or a severance payment, then specific withholding tables may have to be applied. In most standard cases, meaning the only income a certain employer has is the income from his or her employment and the employee is not entitled to certain special forms of tax deductions or allowances, the wage tax that is withheld every month will essentially be equal to the Dutch income tax. Due to this fact, a lot of people don’t even receive an invitation to file the annual tax return. In many cases employees and business owners still choose to do so, often because they can benefit from other tax deductions such as the interest on a mortgage or money invested in education.
Tax payment obligations in the Netherlands
According to Dutch law, wage tax returns need to be filed within a month after the last payment with the Dutch tax authorities. This applies to the payments too of course. So if you, for example, pay your personnel the 20th of each month, you will have to file this information before the last day of the next month. There is an exemption to this rule, namely the period when an employee starts to work at a company, but the Dutch Tax Authorities haven’t granted a wage tax number yet. Once this number is granted, the Dutch tax authorities then confirm all the filing and payment deadlines of historical wage tax returns.
Set up your new recruitment company in the Netherlands in just a few business days
If you are interested in the recruitment business, there is a good chance that the Netherlands will offer you the necessary possibilities of achieving success. The highly skilled workforce together with an excellent fiscal and economic climate, provide excellent conditions for this specific sector. In order to register your company with the Dutch Tax Authorities, you will first need to register your company in the Chamber of Commerce. Once that is settled, you can start your business activities. If you would like to receive more information on the subject, Intercompany Solutions can assist you with professional advice and practical information.