The one client entrepreneur issue is about one client is no client logic the Dutch Government applies. What is that about? Is that a problem? It depends, but we think it does not need to be a problem.
One client entrepreneur
You found an employer abroad who is willing to hire you, but is not willing to employ you. In other words, the foreign employer is willing to accept you as an employee, but very hesitant to become exposed to or subject of a foreign country tax regime.
The most common reply in this case by the foreign employer is: invoice us. Instead of being an employee, you become a contractor. I am rather certain that if we look at the agreement made, we will see an employment agreement. In that agreement the word employee has simply been replaced by contractor.
You are now a contractor with one client only. Is that a problem?
That depends who you ask. If you ask the Dutch Chamber of Commerce (KVK) it is indeed a problem. Such a problem, the KVK is not willing to register your company if you present one client only.
You need to ask us, before you ask the Dutch Chamber of Commerce. Most likely then you do not have a problem and a company registration.
What could be the problem?
The problem is a domestic problem, not international problem. The domestic problem is as follows.
You are employed by a Dutch employer. You terminate your employment on let us say on a Friday and you return to the same office the following Monday. On that Monday you perform the same job, same clients, but now you send an invoice for your services instead of being paid a salary.
Your former employer who now contracts you is very happy, as much less social premiums are to be paid for you. You are very happy as you pay both less income tax and less social premiums.
Solidarity of social premiums
The problem is with the social premium system based on solidarity. If we all do like explained above, not enough social contribution will be paid to fund the system we have in place. A system very much appreciated by the Dutch population. Protecting this system is key, hence the Chamber of Commerce and the Dutch tax office is keen to terminate a deemed employment.
As I stated above, a domestic problem. The foreign employer did not employ the Dutch tax resident before a contract was offered. The foreign employer is not willing to become part of the Dutch tax system. This is a very common fear under foreign companies.
The next best thing is the following: The Dutch tax resident prefers employment. The foreign ‘employer’ is not willing to comply to that. The suggestion is to invoice the ‘employer’. For the Dutch tax resident this is the next best thing to do to contribute to the Dutch system.
One client is no client
Is the phrase ‘one client is no client’ true? Of course that is true. If you only have one client, the moment this one client terminates the agreement, you have no more income. Hence we always motivate the one client companies to find more clients. To think outside the box they are currently thinking in. To go for it. Just do it, as Nike states.
Nonresident employment payroll
Before we assist these type of so called one client companies, we suggest them that we can process a payroll. A payroll where there is no exposure to anything else than this employment only.
A one client company may look like fantastic at the start, less tax, more to spend. Over the years people become aware of possible unemployment, maybe getting disabled or not able to work due to hobby’s like skiing or cycling.
Is the old age pension set in place? These worries are not for the employee. An employee working in the Netherlands for a foreign employer falls under Dutch rules and regulations. This employee is socially insured for unemployment and disability. The pension contributions is something that needs to be negotiated.
Tax is exciting
We think tax is exciting. Running the Dutch payroll of a foreign employer is exciting. We also get excited about a company with one client only. As long as Dutch rules and regulations are accepted and executed, we will be pleased to assist.
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