On January 1, 2021, the new Pilot will be introduced to secure Residence Permits for Essential Start-up personnel. From this date it is in principle possible for young and innovative start-ups to recruit a limited number of staff with non-EU nationality and to sponsor a residence permit with work authorization under certain conditions.

With the Pilot the Dutch government hopes to expand the scope of the already existing Start-up Visa to include key personnel, who cannot be considered an entrepreneur and at the same time do not (yet) receive salaries matching those of the regular Highly Skilled Migrant population in the Netherlands, as a start-up usually lacks the funds to pay these salary norms.

A start-up company can use the Pilot for an initial period of max. 3 years, from the moment the first residence permit has been issued under this category. Important limitations here are that the start-up cannot have more than 15 employees or contractors and that the Pilot is only available for a maximum of 5 key employees in the start-up. Once granted, the permit will initially be granted for 1 year and can be extended if all requirements are still met.  If the start-up does no longer meet these basic employee limitations, it is assumed that the company has grown out of the initial start-up phase and should be able to enrol in the regular Highly Skilled Migrant schemes and secure Recognized Sponsorship accordingly.

Most importantly in the admission of the Start-up into this Pilot is that it needs to demonstrate that it is ‘starting and innovative’. This means that evidence must be provided regarding the innovative character, capacity, financial position, structure and growth plan of the company. Upon request from the Immigration authorities (IND), the Dutch Enterprise Agency – RVO (in Dutch: Rijksvoorlichtingsdienst voor Ondernemend Nederland) will be engaged to review these aspects and therefore plays an important role in assessing the application. According to the draft regulations, the IND can, in principle, request 3 types of advice from the RVO, depending on the type of application and situation of the start-up in question.

The first type of advice applies when the start-up uses the new residence scheme for the first time and is therefore not yet known to the IND. This also concerns local Dutch start-ups that have no link with other countries. RVO will then test all aspects of the innovative and starting character. The agreement between the employer and the essential staff member will also be assessed by RVO, as well as the employee participation of a percentage of the start-up.

The second advice variant is applicable when it concerns an application for a start-up in question which is already known to the IND. This is the case when the founder of the start-up has already used a recognized facilitator for the start-up residence permit scheme. If this start-up makes use of the essential start-up personnel scheme for the first time, RVO will no longer test all aspects, and only on the growth and the employment contract (including employee participation). It must be demonstrated that the essential member of staff will ensure the necessary growth and development of the start-up.

A third advice request is possible if the start-up has already made use of the Pilot. As mentioned, within 3 years following the 1st application, it is possible to apply for a maximum of 5 applications under this scheme, or to renew the permits already granted. In such a situation, the innovative and starting aspect of the start-up will no longer be tested and only the employment contract (including employee participation) will be tested. It is to be expected that these types of advice request will be swiftly handled by RVO.

Upon receipt of a positive advice from RVO, the IND is able to approve the application (provided that the basic requirements have been met, e.g. valid passport, absence of a criminal record etc.). The Dutch residence permit also provides work authorization for the employee and will be issued for 1 year. Family members such as partners and children can apply for dependent permits and will enjoy the same work authorization rights as the employee. Moreover, the employee (and accompanying family members) are not required to undergo a Dutch language and integration examination as part of the immigration process.

The intention with this Pilot largely corresponds with the wishes and recommendations from the research reports and the start-up sector. It finally offers young and innovative start-ups the opportunity to hire a number of crucial staff members with non-EU nationality so that the Netherlands remains attractive for talent. The Pilot will be regularly evaluated to see whether it meets expectations and objectives and can be adjusted where necessary over the coming years. The reviews made by RVO may potentially raise doubts about functionality especially in case of advice options 1 or 2, which can potentially take a considerable amount of time. Also, the legislator has been keen to prevent possible risks and improper use of the scheme as much as possible, which may potentially result in a high(er) number of unsuccessful applications and gives little clarity for the start-up companies on potential success rates prior to the actual application and settling down of the start-up in the Netherlands.

RVO has made clear though that they will do anything in their power to advice potential Pilot applicants in advance of the application. A welcome step indeed as it would reduce unsuccessful applications and will help new start-ups to decide whether the Netherlands is the right place for their new business.

If you consider applying under this new scheme for a residence permit in the Netherlands and wish to hire foreign staff for your start-up, please contact Dominique Coenen, Partner at Expat Management Group directly through coenen@expatmanagementgroup.com