Business or work? 

Jun 9, 2016

Things you may not know about Dutch work authorisation requirements for foreign directors, supervisory board members, (related party) employees and shareholders of Dutch companies 

In our increasingly interconnected world, companies are questioning whether they need to relocate their individual employees or directors particularly when relocation is so expensive. Instead of sending them abroad for years at a time, together with all their family members, why not send them to a particular location when needed? In this way companies avoid additional taxes, housing is not required and the cost of living and other expenses are reduced.

Employers do not realise that sending employees or the director for a shorter period of time may pose a compliance threat. In order to avoid the expenses and the cumbersome bureaucratic processes of work authorisation procedures, business people frequently travel in and out of the country as a tourist or business visitor whilst the nature of their working activities require work authorisation. By booking their own travel (or having their assistants making the required reservations), overstays are overseen, work authorisation is not requested resulting in an (Shengen) entry denial and detention at customs.

The short-term nature of the visit has the tendency to turn into a longer assignment, as local (or international) management require the employee to stay on for another few months. Not only does this create foreign income tax and social withholding requirements, their initial stay as a business visitor was basically on improper grounds exposing them (and their employers) to high compliance risks.

Unfortunately, employees being denied entrance or being penalized for tax violations are occurring on a frequent basis. For this reason, the Dutch Labour Authority is increasingly visiting and checking companies whether they have the proper work authorisation in place. Companies may receive penalties, the foreign national can be deported, all resulting in quite a reputation damage.

Before going on a business trip or on an international assignment, it is therefore worthwhile to check the immigration and visa requirements, tax and social security implications.

As a general rule, we inform our clients (EU/EEA/Swiss nationals not included) that work authorisation is required, irrespective of the duration (whether for one day or three months) of the working activities.

For some limited categories of activities however, work authorisation is waived. Business meetings on behalf of the home country employer belongs to one of these categories.

However, the business person may only share procedures. Sharing procedures entails exchanging information on an equal level (peer-to-peer). It should not include knowledge transfer neither may it include any training activities.

Furthermore, the work authorisation requirement for business persons is waived for a maximum of 13 weeks within a 52 week period, be it interrupted or not.

Please note that once the business person leaves the meeting room to check and answer emails, work authorisation is required.

Software implementation is another activity that may fall under the grey area of exemptions. As long as the foreign national travels to the Netherland to install and implement software products on equipment manufactured and supplied by the home country company of the employee, there will be no issues. Consequently (and as an example), the Indian national travelling from India to the Netherlands to implement software on equipment manufactured in the United States is a typical activity that requires work authorisation.

The above are not the only exceptions and it is highly recommendable to check ahead whether specific activities fall under an exemption. We will be happy to assist!


Should the Labour Inspectorate visit the company and notes that working activities are taking place without the required work authorisation, the employer/Dutch entity risks a fine of € 8000. The foreign directors, supervisory board members, (related

party) employees and shareholders can be denied entrance the next time they may wish to enter the Schengen area; they can be requested to leave the Schengen area immediately or be deported if the overstay is too long.

A few Netherlands tax aspects 

Please note that Dutch wage tax may be due on the above mentioned Dutch working days (even if work authorisation is not necessary). This will, for example, be the case if no Dutch tax treaty applies, if the relevant tax treaty allocates the right to levy to the Netherlands for the Dutch working days or if the wage is charged on a specified basis to a Dutch entity.

In some cases, especially where foreign board members of a Dutch company regularly fly in from abroad to the Netherlands for example to ensure that the effective management of the company takes place in the Netherlands, a Netherlands work permit for the foreign board member (and even a supervisory board member) is usually not only mandatory, it is also helpful in establishing/strengthening the place of effective management of the Dutch company.

Please contact Hélène Jonker (immigration) or Leon van Baal (tax) if you have any questions regarding the above.