Germany-Netherlands: A Natural Expansion
Germany is the Netherlands' largest trading partner, and the economic relationship between the two countries is deeply intertwined. Many German companies expand into the Netherlands for access to international talent, the English-speaking business environment, and the Amsterdam/Rotterdam startup and logistics ecosystems.
As EU member states, German companies benefit from freedom of establishment, meaning no work permits are needed for German nationals. However, significant differences in employment law, tax systems, and business culture require careful navigation.
Key Differences: German vs. Dutch Employment Law
- Termination: While both countries have strong employee protections, the Dutch system (via UWV or Kantonrechter) differs significantly from the German Kündigungsschutzgesetz procedures.
- Sick Leave: Dutch employers must pay 70–100% of salary during illness for up to 2 years — far longer than the German 6-week Entgeltfortzahlung obligation.
- Works Councils: The Dutch threshold is 50 employees (vs. 5 in Germany for a Betriebsrat), but Dutch works council rights are substantial.
- Holiday Entitlement: Dutch minimum is 20 days for full-time (similar to Germany), but vacation allowance (vakantiegeld) of 8% of annual salary is unique to the Netherlands.
Cross-Border Employment Considerations
German companies often start with cross-border commuters or temporarily seconded employees before establishing a full Dutch operation. Key considerations:
- A1 Certificates: Essential for social security coordination. German employees working temporarily in the Netherlands must have an A1 certificate.
- 25%/10% Rule: If a cross-border worker performs more than 25% of work outside their country of residence, social security shifts to the employer's country.
- Tax Liability: After 183 days of work in the Netherlands within a 12-month period, Dutch income tax liability typically arises.
Setting Up the Dutch Entity
The process is straightforward for German companies given the EU framework. We handle the full incorporation, leveraging the strong network of German-speaking notaries in the Netherlands who can draft articles of incorporation familiar to German corporate structures.
