Five things to know about the Dutch-American Friendship Treaty (DAFT)

Article provided by Kroes Advocaten, an IN Amsterdam partner

What is the DAFT?

Signed in 1956, the Dutch-American Friendship Treaty (DAFT) is a bilateral agreement between the Netherlands and the USA. Its main intention is to foster trade and economic relations. As part of the treaty, US citizens can benefit from a preferential immigration scheme if they are starting their own business in the Netherlands – which means being self-employed – and invest a minimum amount of capital in this business.

Who is eligible for a DAFT permit?

To qualify for a Dutch residence permit under the DAFT, you must be a US citizen who meets the general requirements for residency in the Netherlands. In addition, you must register a business at the Dutch Chamber of Commerce (KVK). All legal forms of companies are permitted, including a sole proprietorship (eenpersoonszaak) or limited liability company (BV). The process of gaining a residence permit under the DAFT is simplified and generally a much faster and smoother experience compared to that for a regular self-employment permit.

In some cases, holders of a DAFT permit are able to benefit from the 30% ruling, a tax benefit  for highly skilled migrants. This only applies if their company is a BV and if they earn a certain minimum salary.

Financial requirements and necessary documents

In order to be eligible for a DAFT permit, an applicant needs to invest ‘substantial capital’– currently at least €4,500 – into their Dutch business. Applicants are considered independent entrepreneurs if they own at least 25% of the company (for example in the case of a BV).

The IND is currently running an ongoing pilot programme as part of which the application is already approved if an applicant meets the general requirements for residency (see above) at the time of applying, without the need to send proof of business and the invested capital in advance. The applicant then has a period of six months from the issuance date of the permit to obtain and keep on file the following:

• proof of registration of their company at the Chamber of Commerce (called an ‘extract’ – uittreksel);
• an opening balance for the company that shows the invested capital. The opening balance must have been prepared by a Netherlands-based accountant with a BECON number;
• a business bank account that shows the invested capital.

Length of stay and conditions for renewal

The DAFT permit is initially valid for two years, but it can be extended if within those first two years the invested capital never drops below the minimum threshold of €4,500 and if there has been business activity. The renewed permit is then valid for five years.

After five years of continued legal residence in the Netherlands, permit holders can become eligible for a permanent residence permit and/or Dutch citizenship through naturalisation (other conditions apply).

Family members of DAFT permit holders

The DAFT permit enables the holder to be accompanied by their spouse and any children under the age of 18. The spouse does not require a work permit to work in the Netherlands, either in paid employment or as a self-employed person.

Non-married partners can only apply for their residence permit under the regular Dutch family reunification rules, which include an income requirement. This essentially means that the DAFT permit holder needs to prove that they have sufficient income to support their unmarried partner. For owners of an eenmanszaak, this means having earned a sufficient income for at least 18 months. DAFT permit holders with a BV can submit an application if they are a director-major shareholder (DGA) of the company and have an employment contract that is valid for at least another 12 months at the time of application.

More information and advice

Contact Kroes Advocaten for more information, advice and support with applying for or extending a DAFT residence permit. With a 100% success rate in accepted DAFT residence permit applications, they are well-positioned to help navigate the application process.