Regulation and compliance

Licensing procedures

Must foreign designers and contractors be licensed locally to work and, if so, what are the consequences of working without a licence?

Dutch laws do not provide for specific licensing regulations for foreign designers and contractors operating in the Netherlands.

However, foreign contractors from another EU member state who bring their employees to the Netherlands must report this to the Dutch Social Insurance Bank (SVB) on the basis of the Dutch Act on Posted Workers (WagwEU). This reporting must be done digitally on the website of the SVB.

Also, contractors using employees from outside the European Economic Area (third-country nationals) on a construction project in the Netherlands must have work permits for these employees. This also applies to self-employed persons that are third-country nationals unless these self-employed persons can show a residence permit allowing them to work as a self-employed person in the Netherlands. In the absence of work permits, the Dutch Social Affairs and Employment Inspectorate may impose fines on the contractor (acting as employer) and on the principal of the contractor. Further, the contractor and the principal will be registered in a publicly available register as companies that have violated the Foreign Nationals (Employment) Act.

Competition

Do local laws provide any advantage to domestic contractors in competition with foreign contractors?

Dutch laws do not provide advantages to domestic contractors in competition with foreign contractors.

In the event of publicly tendered contracts by public entities, it is specifically prohibited to discriminate against contractors from other European Economic Area member states (as of 1 January 2021, the EEA no longer includes the United Kingdom). In practice, when organising limited tenders, local authorities have a tendency to favour regional contractors over other domestic or foreign contractors.

In many cases, domestic contractors do have practical advantages over foreign contractors. For example, domestic contractors tend to find it easier to fulfil criteria, such as having a local branch or meeting language requirements. In addition, foreign contractors from outside the European Union working on a construction project in the Netherlands must have work permits for their employees if they are third-country nationals.

Competition protections

What legal protections exist to ensure fair and open competition to secure contracts with public entities, and to prevent bid rigging or other anticompetitive behaviour?

The EU and Dutch public procurement rules ensure transparent and non-discriminative tender procedures to compete for all contracts with public entities that exceed the applicable thresholds (as at April 2021: €5.35 million for works contracts), although certain specific exemptions apply. These tender procedures are open to all undertakings within the European Economic Area and all member states of the Government Procurement Agreement under the World Trade Organization. Although the United Kingdom is no longer subject to the EU public procurement rules, the EU and the United Kingdom agreed on public procurement rules in the Trade and Cooperation Agreement, in which the Government Procurement Agreement is declared applicable. Public entities may restrict access to contracts below the applicable thresholds if they have valid reasons to do so; however, in practice, those contracts are often publicly tendered as well.

Bid rigging (which also includes ‘cover pricing’ (ie, submitting a bid with no intention of winning the tender in concert with another party bidding with the aim of winning)) is prohibited as a hardcore infringement of both the EU and the Dutch cartel prohibition. Since its inception, the Authority for Consumers and Markets (ACM) has imposed fines for bid rigging and cover pricing practices in, among others, the construction industry on many occasions. For example, on 16 June 2020, the ACM imposed a fine on two roofing contractors for impeding competition in a tender process (bid rigging). Parties that have been sanctioned for bid-rigging agreements by the ACM or another competition authority may also be excluded from participating in public tenders.

Bribery

If a contractor has illegally obtained the award of a contract, for example by bribery, will the contract be enforceable? Are bribe-givers and bribe-takers prosecuted and, if so, what are the penalties they face? Are facilitation payments allowable under local law?

The award of a contract that has been illegally obtained may lead to the contract being void or subject to annulment pursuant to Dutch law. The relevant consequence depends on the matter of illegality. If declared void or annulled, the contract will not be enforceable.

The main legislation relating to anti-bribery and anti-corruption offences is detailed in the Dutch Penal Code and includes rules regarding active and passive bribery of public officials (public bribery) and non-public officials (commercial bribery). Combating bribery and corruption is the task of the Public Prosecution Service and other authorities. Facilitation payments fall within the scope of public bribery under the Dutch Penal code and are, therefore, punishable under Dutch law. 

There is a range of maximum sentences that can be imposed as a result of the different bribery and corruption offences. The maximum penalty that can be imposed on legal entities is €900,000 or 10 per cent of the annual turnover of the bribing entity.

Reporting bribery

Under local law, must employees of the project team members report suspicion or knowledge of bribery of government employees and, if so, what are the penalties for failure to report?

The Dutch Penal Code penalises bribery. Neither the Dutch Penal Code nor other Dutch laws include rules that oblige members (ie, individuals) of a project team to report bribery.

Political contributions

Is the making of political contributions part of doing business? If so, are there laws that restrict the ability of contractors or design professionals to work for public agencies because of their financial support for political candidates or parties?

Making political contributions is not part of doing regular business in the Netherlands. Making these payments with the intention to gain – directly or indirectly – a business advantage could very easily constitute an act of bribery under the Dutch Penal Code.

Compliance

Is a construction manager or other construction professional acting as a public entity’s representative or agent on a project (and its employees) subject to the same anti-corruption and compliance rules as government employees?

According to Dutch case law, a very broad scope applies to the definition of public officials – the Dutch Supreme Court has ruled that a public official includes any person appointed by a public office to exercise some of the powers of the state or its agencies. This also applies to a person who is appointed to a position (with a public character) that the person cannot be denied to perform part of the government’s tasks. Consequently, it is possible that a construction manager or other construction professional acting as a public entity's representative or agent on a project (and its employees) may be qualified as a ‘public official’ within the meaning of the anti-bribery provisions for government employees. However, this is not always the case and depends on the circumstances of the case.

Other international legal considerations

Are there any other important legal issues that may present obstacles to a foreign contractor attempting to do business in your jurisdiction?

Work permits are required if third-country nationals work on a construction project in the Netherlands. If foreign workers are working in the Netherlands, certain employment law rules (eg, the Dutch Minimum Wage Act) apply immediately, as well as (part of) the collective bargaining agreement in the construction sector. If the foreign workers who are being employed by a contractor from another EU member state and posted to the Netherlands work for 12 months in the Netherlands, almost all Dutch employment legislation will apply to them. The period of 12 months can be extended to a maximum of 18 months.

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1 May 2022