DAFT Treaty permit - Residency as an American national in the Netherlands: Harder than ever?
If you want to obtain a residence permit in the Netherlands, and you hold a US passport, you have a head start compared to people with other nationalities. This head start is based on the Dutch – American Friendship Treaty (DAFT in short).
Head start for Americans in the Netherlands
The DAFT is a fairly old treaty that gives Americans the possibility to reside in the Netherlands as entrepreneurs. The requirements are quite easily met, and since these requirements are set in a bilateral treaty between the two countries, it exempts American citizens of all the "usual" requirements for entrepreneurs. However, we are now slowly seeing a change in attitude of the IND (the Dutch Immigration Department). It seems that the IND is reviewing these applications, and especially applications for extensions, stricter than ever.
Background and requirements of DAFT
The DAFT Treaty between the Netherlands and the US that regulates the requirements for Americans moving to the Netherlands as entrepreneurs has actually never changed since 1956 (when the Treaty entered into force). At that time, the Netherlands wanted to attract capital from abroad to build up the country after WWII.
And so the government set up a treaty making it easier for American entrepreneurs to settle in the Netherlands: no work-permit needed. In contrast to most of the other non-EU nationals who would like to set up their own business, American entrepreneurs applying for a permit based on the Treaty do not have to satisfy a very strict points-based system, and do not need to show that their company has innovative value to the Dutch economy.
There are basically two requirements you have to meet as an American citizen to obtain a residence permit based on the DAFT.
You have to be an entrepreneur, leading and developing the general business of a company in the Netherlands. In practice, this means that you have to set up a business and register it with the Chamber of Commerce. Business in this sense is a very broad term. You could for example set up a business as a writer, website builder or consultant.
You need to insert significant capital into your company. This significant capital is set at a capital investment of 4.500 euros and needs to be available in a Dutch business bank account.
This seems fairly simple. However, now, more than sixty years after signing the treaty, the institutions involved in reviewing the applications for a DAFT-permit are no longer synchronized (were they ever?), resulting in a lot of Catch 22 situations in the process of smoothly applying for such a permit. Besides this, the IND is getting more strict in general.
Current view of the Dutch IND
Once you have obtained a DAFT-permit, it is valid for 2 years. Subsequently, you can apply for an extension of 5 years. In our practice, we have never experienced any difficulties with the IND regarding DAFT-permits and the extension thereof, but unfortunately that has changed.
For the initial application, investing the capital is the main requirement (apart from registering the company at the Chamber of Commerce). This seems logical, since, as a starting entrepreneur, you cannot appear to be developing your company already. That is why the requirement of “developing and actively working on the company” becomes more important at the time you apply for an extension after two years.
But what exactly falls under the term “developing and actively working on the company”? The IND now seemingly puts the emphasis on money, meaning revenue since the start of the company. So, what if, for example, you are a writer and your entrepreneurship is based on a creative process of developing and publishing a book, would you be required to show the IND that you have created revenue, or is the creative process that you can show by handing over a completed manuscript also sufficient?
Harsher permit extension requirements
Without having regard for the context of the company, the IND is requesting more and more financial documentation that shows a company's revenue. This however, is not a legal requirement. It seems that the IND is trying to push the interpretation of the Treaty in that direction, making the application for extension harder than ever.
In several cases, the IND has rejected applications for extensions, stating that there was no revenue. On top of that, in some cases they even retrospectively revoked the initial permit. It is unclear as to why the IND is changing its view on the requirements of the Treaty, especially since the text of the Treaty and the legal terms derived from it have never changed.
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