IR Search Anton van Rossum

Anton van Rossum 

4 October 2023

K.J. asks:

After my PhD in physics, I worked for a few years in technical R&D positions at a high-tech machine builder, before moving into a role as a point of contact for customers. As such, I provided application support and training for new product introductions. Several years ago, I joined a supplier in a similar role but within the sales department, and more internationally focused.

When I was ready for the next step, a vacancy for a business development manager at a US company, a leader in advanced technologies, caught my eye. After initial interviews, my enthusiasm grew. It’s a very varied role, deeply technical but also very commercial, within a company that markets highly competitive products and has managed to build an impressive customer base in a short time. Following a two-month selection process, I was offered a contract. It’s a very good offer, but I do have a few questions.

For example, the contract states that a doctor’s certificate is required to prove my illness in case of absence. There’s also no provision for pension and no expense allowance for my home office is included. Furthermore, I wonder whether it’s normal that I’m offered a contract under German law. I was told that the contract was drawn up by an experienced payroll company, but I live in the Netherlands and I’m supposed to work here from a home office. What’s your opinion?

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The headhunter answers:

The company’s HR department really needs to look into this issue again. While an employment contract with a foreign legal entity isn’t without legal effect, your case raises more questions than necessary.

For one, your German contract contains several clauses that conflict with Dutch law and are therefore automatically null and void, to be replaced by the provisions of Dutch labor law. In the Netherlands, for example, you’re entitled to an 8 percent holiday allowance and there are specific rules for the probationary period and contract termination. Clauses declaring German law applicable are also null and void, as are all other references to German law articles. I’m sure this will be quite confusing for the German HR department as they won’t be able to answer a lot of questions about your contract with certainty.

In practice, you and your German employer will run into even more problems. Your employer is going to have to pay tax in the Netherlands and therefore needs to register you as an employee with the Dutch tax authorities. This is done by filling out the form called “Aanmelding onderneming buitenland,” after which he’ll receive a payroll tax number – note that all correspondence is in Dutch. At the same time, the German tax authorities will also claim their rightful part of the loot. All in all, this contract – with all its consequences – won’t make you happy.

However, all the tax problems, social insurance issues and confusion over employment law can easily be avoided. You could set up a private limited company in the Netherlands, a “BV,” or buy a ready-made one within a few days. Granted, there are some costs involved, but these are peanuts compared to the costs the German contract will entail.

If the company doesn’t want this, you could opt for a payroll construction. You can find a host of companies that can offer you a ‘simulated’ legal entity. These service providers have all the knowledge of local law and can function as an employer with all the terms of employment that your employer has agreed with you.