Checklist for outsourcing work: rules and regulations

You are obliged to recruit staff first in the Netherlands, the European Economic Area (EEA) and Switzerland. You are only allowed to look for staff in other countries if you can not find suitable staff in these countries.

You are obliged to verify the identity of all workers on the basis of an original identity document. This also applies to freelancers/self-employed entrepreneurs or employees of contractors/subcontractors to whom you outsource work.

When outsourcing work to foreign workers, you have to check whether they need a work permit. The contractor or subcontractor must apply for this permit; in the case of freelancers/self-employed entrepreneurs, you must apply yourself.

If you outsource work to a foreign worker, in some situations they may remain covered by social insurance in their own country. In that case you are not required to pay social security contributions for this worker. To be certain on this point, you can ask your contractor or subcontractor to submit an E101/A1 statement.

When you hire staff via an outsourcing construction, the company you do business with is liable for payroll tax. However, the Netherlands Tax Administration may hold you liable for the payroll tax owed by your contractor or subcontractor. One way of preventing liability for payroll tax and turnover tax is to ask this company to set up a blocked account (G account).

Please note: By doing business with an SNA-certified company you run less risk of claims from the Tax Administration if this company fails to meet its obligations.

If you are outsourcing work to a freelancer/self-employed entrepreneur, either resident or non-resident, you must make sure there is no (notional) employment relationship. This is called false self-employment. The Tax Administration checks whether the relationship is really that of a client and a self-employed person. If there is an employment relationship, you have to pay payroll taxes for the freelancer.

As an employer, you must provide a safe and healthy workplace for all personnel, including freelancers/self-employed workers and employees who are working for you via a contractor/subcontractor.

Make sure you observe the maximum number of working hours. The Working Hours Act states the number of hours that employees are permitted to work and when they are entitled to breaks. This Act also covers workers whom you employ via contractors/subcontractors and, in some cases, to freelancers/self-employed entrepreneurs to whom you outsource work.

Every worker has the right to the minimum salary in the Netherlands plus the standard holiday allowance. If you outsource work to employees of contractors/subcontractors you are also responsible for them receiving at least the Dutch minimum wage. You must include this in your contract with the subcontractor or agency.

The contractor/subcontractor or freelancer/self-employed entrepreneur to whom you outsource work will charge VAT on that work. You can deduct this VAT as input tax. In some sectors, the subcontractor is obliged to reverse-charge VAT to you. This also applies if you outsource work to a foreign entrepreneur.