Dutch American Friendship Treaty: residence in the Netherlands for American entrepreneurs

The Dutch American Friendship Treaty is formally known as the Treaty of Friendship, Commerce and Navigation between the Kingdom of the Netherlands and the United States of America.

The treaty was concluded in The Hague on 27 March 1956 and entered into force on 5 December 1957.

The treaty was signed during the post-war period, when the Netherlands and the United States sought to strengthen their economic relationship and encourage mutual trade and investment. It was not originally created as an immigration programme in the modern sense. Its purpose was broader: to facilitate economic activity and commercial cooperation between both countries.

Over time, the treaty has become particularly valuable for American entrepreneurs who wish to establish themselves in the Netherlands.

Under the DAFT, American citizens can rely on a more favourable immigration procedure when opening and operating a business in the Netherlands. The treaty therefore offers more than a straightforward company registration route. It provides eligible entrepreneurs with a legal basis to reside in the Netherlands while developing their business.

The Netherlands has a long history of international trade and a highly developed economy. Although it is a relatively small country, its geographical position makes it a natural gateway to the European market.

The Netherlands is also accustomed to welcoming international businesses and professionals. English is widely spoken, particularly in larger cities and within the business community. Dutch institutions are generally accessible and the procedures for registering a business are relatively transparent.

For international entrepreneurs, the Netherlands offers several advantages:

• a strategic location within Europe;
• convenient transport connections to other European countries;
• modern physical and digital infrastructure;
• a stable legal system;
• an internationally oriented business environment;
• a highly educated and multilingual workforce;
• different legal structures for starting a business; and
• the possibility of building a long-term future in the Netherlands.

The DAFT can be suitable for consultants, creative professionals, designers, technology specialists, online service providers, freelancers, coaches, writers, marketing professionals and other entrepreneurs who provide independent services.

It can also be suitable for entrepreneurs who intend to establish a company with a broader commercial model.

The correct approach depends on the applicant's individual circumstances, business activities and long-term plans.

One of the practical advantages for American citizens is that they do not need to obtain a provisional residence permit before travelling to the Netherlands.

This entry visa is known in Dutch as a machtiging tot voorlopig verblijf, commonly abbreviated as MVV. For nationals of many countries, the MVV procedure requires the applicant to wait for the immigration decision abroad and, after approval, collect the visa sticker from a Dutch embassy or consulate before travelling to the Netherlands.

This means that an American entrepreneur can generally travel to the Netherlands first and submit the DAFT residence permit application from within the Netherlands. The applicant does not need to wait in the United States for the residence permit decision or visit the Dutch embassy to collect an MVV before entering the country.

This makes the DAFT procedure more practical for entrepreneurs who wish to begin arranging their relocation, housing and business plans from within the Netherlands.

Family members can often travel together with the entrepreneur and submit their applications after arrival. However, the position of each family member must be checked individually. A family member who also holds American citizenship is generally MVV exempt. A family member with another nationality may need an MVV, a short-stay visa or another basis for lawful entry.

Pathway Partners assesses the immigration position of the entire family in advance, so that the relocation can be planned carefully and avoid unnecessary delays.

The DAFT is intended for American citizens who wish to carry out genuine business activities in the Netherlands. In general, the following requirements apply:

• the applicant has American citizenship;
• the applicant holds a valid passport;
• the applicant does not pose a threat to public order or national security;
• the applicant establishes or operates a business in the Netherlands;
• the applicant develops and leads the business activities personally;
• the applicant registers the business with the Netherlands Chamber of Commerce, known in Dutch as the Kamer van Koophandel or KVK;
• the applicant invests the required capital in the Dutch business; and
• the business activities are genuine and are actually carried out.

The DAFT may also apply in certain other situations. For example, an American entrepreneur may trade between the Netherlands and the United States, represent an American business in a key position or practise an independent profession.

The precise requirements depend on the nature of the activities and the legal structure of the business.

One of the most important advantages of the DAFT is the relatively modest capital requirement.

For most business structures, the entrepreneur must invest at least €4,500 in the Dutch business.

In practice, this amount is commonly deposited into a Dutch business bank account or otherwise recorded as capital belonging to the enterprise. The appropriate method depends on the legal structure of the company.

The applicant should nevertheless maintain the required capital within the enterprise. When the residence permit is extended after the first two-year validity, the Dutch Immigration and Naturalisation Service, commonly known as the IND, may request annual accounts, a balance sheet or an income statement. These documents allow the IND to assess whether the business has remained active and whether the invested capital has remained within the enterprise.

A common misunderstanding is that an entrepreneur must show that the business is already profitable during the initial stage.

A new business often requires time to develop its activities, build a client base and generate stable income. Under the DAFT, the entrepreneur does not normally need to prove immediate profitability.

The key financial requirement is that the required investment remains available to the business.

However, this does not mean that a paper company is sufficient. The entrepreneur must genuinely develop and operate the business. A DAFT residence permit is intended for active entrepreneurs, not for individuals who merely register a company without carrying out any real activities.

Good administration is therefore important from the beginning. The entrepreneur should retain invoices, contracts, bank statements and other business records. These documents can become relevant when applying for an extension or when preparing a future long-term residence application.

The IND introduced a more practical procedure for first-time treaty applicants in April 2024.

An American citizen who does not yet hold a Dutch residence permit may submit the initial DAFT application before completing the registration with the KVK and before transferring the required investment.

After the residence permit has been granted, the entrepreneur must generally register the business and complete the investment within 6 months. If the entrepreneur does not complete these steps in time, the IND may revoke the residence permit.

This approach makes it easier for American entrepreneurs to begin the immigration process before every practical arrangement has been finalised.

Nevertheless, advance preparation remains important. Before submitting the application, the entrepreneur should consider:

• the proposed business activities;
• the legal structure of the company;
• the business address;
• the required supporting documents;
• banking arrangements;
• financial administration;
• tax implications; and
• the timing of the KVK registration.

Where an applicant already holds a Dutch residence permit and wishes to change the purpose of residence to self-employment under the DAFT, as much supporting evidence as possible should generally be submitted together with the application.

The Netherlands offers several legal structures for entrepreneurs.

The most appropriate structure depends on the applicant's business model, expected turnover, personal liability, tax position and whether the entrepreneur intends to work alone or with business partners.

Pathway Partners can explain the immigration implications of the available structures and assist clients with the practical steps required to establish the business. Where specialist tax advice is required, we can refer the client to a suitable tax adviser.

A DAFT residence permit can also provide a pathway for the entrepreneur's family members.

The entrepreneur may apply for residence permits for:

• a spouse;
• a registered partner;
• an unmarried partner; and
• minor children under the age of 18.

Dutch immigration law does not distinguish between opposite-sex and same-sex couples. Homosexual couples can apply under the same rules, regardless of whether they are married, registered partners or unmarried partners.

For unmarried couples, the relationship must be genuine and verifiable. The partners will generally need to live together and register at the same address in the Netherlands.

Minor children may also be eligible for family reunification. Additional documents may be needed where another parent remains abroad or shares parental authority.

Family reunification is not automatic. The family relationship and the applicable conditions must be demonstrated carefully.

An important benefit is that the partner of a self-employed residence permit holder is generally free to work in the Netherlands without a separate work permit. The partner is not limited to assisting with the DAFT entrepreneur's business. The partner may work for an employer or establish a separate business.

The Netherlands has a well-developed education system.

Parents do not pay tuition fees for primary education in the Netherlands. Schools may request a voluntary contribution for extracurricular activities. Parents may also need to pay separately for services such as lunchtime supervision or after-school care.

Secondary education is also generally free and open to all children. Parents do not pay tuition fees for their children's secondary education and most textbooks are provided by the school. Certain additional expenses may still apply, depending on the school and the child's activities.

These rules are part of the general Dutch education system. They are not limited to Dutch citizens and do not arise specifically from the DAFT residence permit.

International schools are also available in different parts of the Netherlands. Some international schools receive partial public funding, while others are private. Tuition fees vary considerably. Families can therefore select a school that fits their preferred curriculum, location and budget.

A different system applies when a child later attends a university or university of applied sciences.

Dutch higher education institutions distinguish between statutory tuition fees and institutional tuition fees. Institutional tuition fees can be substantially higher.

Dutch citizens and holders of certain qualifying residence permits generally meet the nationality or residence-status requirement for statutory tuition fees, provided that the other conditions are also met.

A long-term EU resident permit is a type II or V residence permit and is one of the residence permits that can qualify a student for the Dutch statutory tuition-fee regime. Dutch citizenship also places the student in a stronger position.

The child's own nationality and residence status are important. A change in the parent's residence status may also affect the residence position and future options of the family members. The precise result depends on the family's circumstances and should be assessed individually.

For parents who intend to remain in the Netherlands for the longer term, it is sensible to consider these future education costs when planning the family's immigration strategy.

Children under the age of 18 must have Dutch health insurance, but they do not pay premiums for the standard health insurance package.

Parents must register their children with a Dutch health insurer.

The standard insurance package covers essential healthcare. Supplementary insurance is optional and may result in additional costs. Families should also take into account that certain forms of care may not be fully covered under the standard package.

As with primary and secondary education, this arrangement is part of the Dutch healthcare system generally. It is not an exclusive benefit available only to DAFT applicants.

A Dutch residence permit also makes it easier to build a life in Europe.

American citizens can already travel visa free within the Schengen Area for short stays. However, without a residence permit, the time they may spend in the Schengen Area is limited.

A DAFT residence permit changes the position in an important way. It allows the holder to live lawfully in the Netherlands for the duration of the residence permit. Time spent residing in the Netherlands is no longer merely a tourist stay.

The residence permit also makes it convenient to travel to other Schengen countries, including Spain, Italy, Portugal, France, Germany and Belgium, without applying for a separate Schengen visa.

This provides an attractive European base for business meetings, holidays and family visits.

A Dutch residence permit is not the same as an unrestricted right to relocate to another European country. An entrepreneur who wishes to live, work or establish a business in another country must comply with the immigration and registration rules of that country.

The DAFT can be more than a temporary solution.

It can also provide a pathway towards a more secure long-term future in the Netherlands and Europe.

A self-employment residence permit is regarded as a non-temporary purpose of residence under Dutch immigration law.

After at least 5 consecutive years of lawful residence in the Netherlands, an entrepreneur may be eligible to apply for long-term EU resident status, provided that the applicable conditions are met. These conditions include requirements concerning:

• continuous lawful residence;
• the permitted periods spent outside the Netherlands;
• sufficient and sustainable income;
• civic integration; and
• public order.

A long-term EU resident permit does not have an expiry date, although the residence document itself must be renewed periodically.

Long-term EU resident status offers greater security than a temporary residence permit. It can also make it easier to apply for a residence permit in certain other EU countries.

The rules concerning main residence are more favourable for long-term EU residents. This provides greater flexibility for individuals who expect to spend time elsewhere in Europe or abroad in the future.

An entrepreneur may also become eligible to apply for Dutch citizenship through naturalisation after at least 5 consecutive years of lawful residence, provided that the applicable conditions are met. These conditions generally include:

• valid lawful residence during the procedure;
• a qualifying residence purpose;
• civic integration;
• the absence of serious public-order concerns; and
• in many cases, renunciation of the original nationality unless an exemption applies.

Dutch citizenship provides the strongest legal position.

A Dutch citizen is also a citizen of the European Union and has the right to live, work and study throughout the EU, subject to the applicable rules.

For entrepreneurs and families who intend to remain in Europe in the longer term, it is advisable to consider the future residence strategy from the beginning. Residence gaps, extended periods abroad and incomplete administration can affect future applications.

A DAFT application is more accessible than many other self-employment procedures. However, a successful relocation involves more than submitting an immigration form.

The entrepreneur must consider the residence permit application, company registration, capital investment, financial administration, housing registration and family applications. The order in which these steps are taken can be important.

Pathway Partners offers a fixed-fee package for DAFT applications. Our services are designed to cover the immigration procedure and the practical assistance required to establish the client's life and business in the Netherlands.

As a boutique immigration law firm, we provide bespoke services based on the client's circumstances. Our assistance may include:

• assessing whether the DAFT is the most suitable immigration route;
• explaining the residence permit procedure;
• preparing and submitting the application;
• advising on the practical steps required to open a business;
• discussing the available Dutch business structures;
• assisting with the required supporting documents;
• helping the client prepare for registration with the KVK;
• accompanying the client to the KVK appointment where necessary;
• accompanying the client to a Dutch civil law notary where a BV is established;
• assisting with registration at the Dutch municipality;
• preparing residence applications for partners and children;
• advising on the long-term immigration strategy; and
• referring clients to trusted partners for specialist tax advice where necessary.

Tax planning is an important part of relocating to another country. Through our professional network, we can refer clients to advisers who assist with Dutch taxation and financial administration. This helps clients understand their obligations in advance and reduces the risk of unexpected financial pressure after arriving in the Netherlands.

Our aim is to ensure that each part of the relocation is planned carefully and that the services are provided seamlessly.