IMPACT – MEDIUM

What is the change? The Dutch government is preparing to introduce a pilot program that will help startups employ high-skilled workers from outside the European Union.

What does the change mean? The program will help startups hire non-EU workers who are unable to qualify for residence permits under the Highly Skilled Migrant (HSM) program’s salary thresholds and who do not hold enough company shares to qualify for a startup residence permit.

  • Implementation date: Summer of 2020.
  • Visas/permits impacted: Residence permits for startup employees.
  • Who is impacted: Startups operating in the Netherlands and non-EU nationals interested in working at a startup in the Netherlands.
  • Business impact: The program will give startups more flexibility in hiring international talent.
  • Next steps: The next steps are drafting the necessary legalization and testing the scheme. The pilot program is expected to start in the summer of 2020.  

Additional information: The HSM program is an attractive option for many businesses, but startup companies are sometimes unable to meet the program’s salary requirements. This is in part because startups often compensate employees with a relatively low base salary in combination with shares in the company. The existing startup residence permits are an option for some non-EU workers, but only those who have significant shares in the company where they are working.

The pilot program is being developed to address this challenge. Some of the key points of the program are as follows:

  • It will be open to both Dutch and foreign startups that are established in the Netherlands.
  • It will help startups that are not yet able to meet HSM salary thresholds to recruit high-skilled non-EU workers.
  • Employers will be required to meet the lowest HSM salary threshold. Currently, that threshold is €2,364 gross per month.
  • Employers will be required to demonstrate “employee participation” in the company, e.g., stock options, certificates of shares, or shares without voting rights.
  • Employers will be required to show that the employee is essential to the growth of the startup.
  • Startups must have no more than 15 employees and no more than five non-EU employees in order to participate.
  • The pilot program will run for a period of three years. Officials will monitor the results and may make adjustments as necessary. Depending on the success of the pilot and potential adjustments, companies and the employees could reapply for the pilot program after the maximum period of three years if they do not yet qualify for the regular HSM program. The government aims, however, for companies and their employees to enroll into the regular HSM program as soon as they qualify because the HSM program is the preferred route.

Analysis & Comments: The planned pilot indicates that the government is increasingly focused on the growth and development of startup companies in the Netherlands. It is designed to help startups attract international talent that might otherwise be unable to qualify for a residence permit. Startup organizations are encouraged to consider pay and employee participation plans so that they are prepared to hire high-skilled non-EU workers once the pilot starts.

Source: Deloitte LLP. Deloitte LLP is a limited liability partnership registered in England and Wales with registered number OC303675 and its registered office at 1 New Street Square, London EC4A 3HQ, United Kingdom.