Netherlands - Contracting

Contracting in the Netherlands is quite different from the other traditional northern European contracting centres in that typically the Contractor must either become a permanent (PAYE) employee of a Dutch company or in the case where a non-Dutch agency is involved, become a permanent employee of the agency who are then obligated to register themselves for Wagetax using a local Accountant / Tax Advisor and pay the contractor net of taxes and deductions.
The Dutch government has enacted this legislation so as to ensure that people working in the country (even in a sub-contract capacity) honour their PAYE and social security liabilities at source.
Dutch tax and employment law is very strict, it includes tax legislation known as Chain Law which states that any party in the employment chain can be made liable for the tax and social security of the employee (sub-contractor) should the sub-contractor fail to pay his or her taxes.
Companies in the Netherlands are very aware of these laws and will refuse to use the services of a contractor unless a Dutch registered company employs them (or a Wagetax registered foreign agency with local payroll agents) and takes responsibility for tax withholding.

However because of the 30% tax ruling for expatriates, contractors can expect to pay somewhere in the order of 30% of their earnings on tax and social security payment making the Netherlands one of the lowest tax areas in Northern Europe for contractors.