Working in the Netherlands as a US Freelancer : how to switch visa from HSM to DAFT
Oct 16, 2023
Lots of Americans move to the Netherlands to live and work here, and some of them end up setting up their own business. For example as a freelancer. It’s also possible for Americans to start working in regular employment in the Netherlands (for example as a Highly Skilled Migrant) and then subsequently transition into working self-employed or as a business owner under the Dutch American Friendship Treaty (“DAFT” in short). Any company in which you own at least 25% of the shares, however big or small, will work for this specific purpose. That includes freelancing companies. In this article we will explain the basics for Americans switching into freelancing from regular employment.
If you want to work as a freelancer in the Netherlands, you must register a company for it. It is not allowed to freelance unincorporated in the Netherlands. As a non-EU passport holder, you must then also obtain a valid visa to work self-employed in the Netherlands. If you are working in the Netherlands as a Highly Skilled Migrant (“HSM” in short) and think that makes your visa situation sorted out, think again. The HSM visa is tied to your regular employment, and thus the visa ends when the HSM employment ends (see below). Hence, as a non-EU passport holder you would normally be looking at the Self Employed Visa in order to obtain the right work permit to freelance in the Netherlands. This would require the preparation of a file substantiating the viability of your prospective business, containing for example financial forecasts, a business plan, business contracts and/or invoices. Not so for Americans. Americans can apply for the Dutch American Friendship Treaty (“DAFT” in short). DAFT is a simplification of the standard Self Employed Visa, which disposes of all the aforementioned requirements. They only need to meet the following criteria: have a US passport, set up a business in the Netherlands, deposit € 4,500 in that business’s bank account, and not have a criminal record in the Schengen area.
The DAFT visa gives the applicant a permit to work as a self employed person in the Netherlands. This means the main applicant can work as a freelancer, business owner, or in any type of business in which they own at least a 25% stake. The applicant may never work in regular employment. In Dutch the text will read “Arbeid als zelfstandige toegestaan, arbeid in loondienst niet toegestaan.” Americans already working in the Netherlands under another visa can quite easily shift to working self employed. For this the DAFT visa is excellently suited. Hereafter we will explain the particularities that arise when switching from a Highly Skilled Migrant (HSM) employment to freelancing. If you are new to the Netherlands and want to freelance here as an American, we have numerous articles explaining how to setup your DAFT correctly.
US Highly Skilled Migrant (HSM) visa holders switching into freelancing
The most important thing for American HSM visa holders switching to DAFT, is for them to apply for the DAFT visa before their current HSM visa expires. Many HSM visa holders have the false assumption they have a 3 month grace period to switch visas. This is not the case. The 3 month grace period only applies if the HSM employee terminates their contract prematurely, and only if they switch to another HSM visa. If the HSM labor contract term simply expires, the HSM visa expires along with that. In the latter case the employee has a 1-month grace period, and again, only to find another HSM employment. Neither of the above grace periods apply if you switch to a self employed visa (such as DAFT). This means the new visa must be in immediate succession to the preceding HSM visa. If this isn’t applied correctly, the timer towards 5 years for permanent residency will be reset to zero, because for this you need to have resided in the Netherlands for 5 years under a valid visa. Therefore make sure you have your ducks in a row before your visa expires, and make sure the new visa application is in before then.
Also bear in mind that the HSM visa is tied to the HSM employment contract. If the employment ends, so does the HSM visa. After the employment, the employee may still have a sticker in their passport that says they have the right to work and reside in the Netherlands. But the Employer must notify the IND of the termination of the contract, after which the HSM visa is invalidated. Hence all HSM visas terminate along with the end of the employment to which it was tied. The fact that you are already in-country on another visa, means you already have a BSN number. That simplifies your DAFT application process, because you don’t have to perform your Gemeente registration anymore and you don’t need to worry about the apostilled documents that come along with that. But that doesn’t mean your business with the IND is done. You will still need to show up at the IND appointment to pick up your residence endorsement sticker and drop off your biometrics if your previous biometrics appointment was longer than 6 months ago.
Switching visas and the 30% ruling
Many expats working in the Netherlands, for example under the HSM visa, are also enjoying the 30% ruling. Beware that HSM and 30% ruling are two different things. The HSM is a visa handled by the immigration office IND. The 30% ruling is a tax break handled by the Dutch Tax Authorities (Belastingdienst). If you transfer from employment to self employment, your 30% ruling doesn’t automatically follow you. You need to apply for it in your new self employed capacity, and for this you must use a BV company. The 30% ruling also has a 3-month grace period. This means you have 3 months to sign your new labor contract (with your own company) starting at the end of your previous employment. NB: If you were put on any kind of (garden) leave in your previous work, the end date of that previous employment equals the start of that leave period, not the end date of your contract. The fact that your were being paid throughout that leave period is irrelevant. We have an extensive FAQ on the 30% ruling that answers a lot of other questions as well.
We hope this helps you on your way. If you have any particular questions, feel free to reach out!