Dutch American Friendship Treaty: how to renew your entrepreneur permit successfully

Under the Dutch American Friendship Treaty (hereafter: "the DAFT"), a US entrepreneur can relatively easily acquire a Dutch self-employment permit. The permit can be issued for an initial period of two years. After two years, it can be further extended for a period of five years. In this article, we will touch on the issue as to how one can renew their DAFT permit successfully.

Genuine business activities

Over the last two years, the IND has become stricter, in the sense that the IND starts actively checking if a US entrepreneur has conducted genuine business activities. Under the DAFT, the enterprise itself does not need to be profitable. However, the IND does want to see that a DAFT permit holder has carried out genuine business activities, which can be proved, for example, by the annual reports. For instance, if the annual reports demonstrate that one has generated an annual turnover of 100000 euros and that they have managed to retain a net profit of 40000 euros per annum, it is not likely that the IND will make a fuss. However, if their business has not been a rising star, the IND may require them to show other evidence, with a view to demonstrating that they have carried out genuine business activities. The evidence can be, for example, e-mail correspondence with (potential) clients, marketing materials and/or YouTube videos!  

The company's equity

Another criterium for a successful extension is that the company’s equity must have always stayed above the required capital amount. In practice, an entrepreneur may often overlook this aspect, especially when they have kept their initial investment in a separate corporate savings account. However, cash forms only a part of the corporate asset, let alone the net worth of the company. Notwithstanding the fact that one may have kept the initial investment intact on a corporate savings account, it does not mean the company’s equity is still above the required amount. In relation to a sole proprietorship, this can easily happen, when the sole proprietor withdraws too much money from their business.

Change of business nature

Moreover, it happens sometimes that an American freelancer chose to set up a limited liability company (also known as BV in Dutch). After a few months, they realize that it is quite expensive to operate their BV. As a corollary, they decide to become a sole trader through setting up a sole proprietorship (also known as “eenmanszaak” in Dutch) and winding down their BV. In such situations, it is important to make sure that they continue meeting the requirements of the DAFT Treaty. Otherwise, the IND can potentially curtail the visa, if the IND finds out that one has not been meeting the requirements for a specific period of time.

Consultation 

Should you have any questions about the DAFT permit renewal and/or other immigration or nationality law issues, please feel free to book a consultation with one of our lawyers.