A company deciding to place a team in Europe, whether to open a market, be closer to customers, or access talent, faces a sequence of problems that are easy to underestimate because none of them is the actual reason for the move. The commercial case is clear. What follows is the machinery: an entity to employ people, permits to let them work, a payroll to pay them, and a social security position that is correct. Get the sequence wrong and the team arrives before it can legally be employed.
You need an entity before you need people
In almost all cases, employing people in a European country requires a local employing entity. A company cannot simply place staff in another country and run them from abroad indefinitely; doing so creates a taxable presence, as we set out in our note on permanent establishment, and leaves the employment on an uncertain footing. The entity is the foundation, and establishing it, with the substance and banking a real operation needs, is the first step, not an afterthought once the team is chosen.
Immigration is the long pole
For team members who are not already entitled to work in the destination country, immigration is usually the longest lead time in the whole project. Work and residence permits, the categories available, the salary thresholds, the processing times, all of these govern when the team can actually start, and they cannot be compressed at the end. A company that leaves immigration until the entity is set up and the offers are made discovers that the binding constraint was the one it addressed last.
The commercial decision to move is made in a meeting. The date the team can actually start is decided by an immigration office, and that date is rarely the one anyone assumed.
Payroll and social security
Once employed locally, the team has to be paid locally, with local withholding and local social contributions, and the transition from a home-country arrangement to a local one has to be handled cleanly. Where people are moving rather than being hired fresh, the posted worker and social security rules determine what applies during the transition, as we set out in our note on posting workers and running payroll across Europe. Getting the social security position right, and evidenced, avoids a later claim for contributions the company thought it had covered.
The 30 percent ruling and making relocation attractive
The Netherlands offers a favourable regime for qualifying incoming employees that can make relocation materially more attractive, which we cover in our note on hiring your first employee in the Netherlands and the 30 percent ruling. Regimes of this kind are a genuine part of the relocation package and a reason the Netherlands is a common landing point, but they have conditions and they change, so they should be confirmed for each specific hire rather than promised in advance.
Sequence it as a project
The move works when it is run as a project with the right order: decide the location, establish the entity, start immigration early, build the payroll and social security architecture, and only then bring the people. Run in that order it is a series of solvable steps. Run in the order the excitement suggests, people first, machinery later, it becomes a team that has relocated to a country where it cannot yet be legally employed, which is an expensive and stressful place to discover the sequence mattered.
If you are facing this, we can help. Montclare handles exactly these situations for international businesses and families. Our services are set out on our services page.
This article is informational and does not constitute tax, legal or financial advice. The right course depends on the facts. Each engagement is subject to scope and applicable regulation.