Social security system in the Netherlands is one of the most complicated in the world. As a result, complying with the administrative requirements involved in employing foreign workers can be a daunting task. Similarly, foreign (agency) contractors working in the Netherlands face a multitude of laws and regulations.
In addition to paying income tax, employees in the Netherlands contribute to several national insurance schemes. And thereby are often obliged to participate in (institutional) pension plans. Such obligations are the result of the collective labour contracts that apply to most sectors of industry and over 80% of the Dutch workforce.
Generally, the employer deducts these taxes, national insurance and pension contributions from employees’ salaries. In addition, employers in the Netherlands contribute to several compulsory employee insurance schemes (e.g. unemployment insurance).
As a rule of thumb, anyone living and working in the Netherlands is required to contribute to the Dutch social security system. There are, however, a number of exceptions.
Foreign nationals whose native country has an agreement with the Netherlands are exempt. But only as long as they continue to make contributions in their native country under the terms of the treaty. In order to apply for exemption from the Dutch system, a certificate (E101/A1) confirming social security coverage in the native country will usually suffice. Likewise, foreign nationals temporarily posted in the Netherlands are eligible for continuation of their social security coverage under the legislation of their native country if a treaty is in place.
Foreign nationals from countries with which the Netherlands shares no social security treaty may be required to pay contributions and be eligible for benefits in both. In some cases, people with short-term positions (less than six months) are exempt from employee insurance scheme contributions. But never from the national insurance schemes.
Recent changes to Dutch legislation have made the eligibility criteria for claiming welfare benefits more restrictive. Many temporary, self-employed and fixed-term contract workers are now excluded. In general, however, anyone with a residence and a work permit is covered by the Dutch social security system. For more detailed information, please consult the “Introduction to the Dutch Social Security System” published by the Dutch Ministry of Social Affairs and Employment.
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