This is an imaginary story about Susan. Susan works in a contact center for a company based in the Netherlands. During the Corono-crisis she (and her boss) discovered that she was perfectly capable of working from home. That brought up an idea. An idea worth spreading.
Working from home and relocating to the UAE
She works from home, has no kids, and her requirements are pretty straightforward. A PC, Internet, a secondary monitor a mouse and a keyboard and she is ready to go. During the Corona-crisis her boss asked her if she had all that equipment herself and if she was willing to use it for the cooperation. And she agreed to that.
Her salary the taxes, her frustration and the proposal
She earns a decent €2.500 gross per month since she works full time. In the Netherlands she has to pay €10.500 taxes per year and her boss also has to pay for her, about three months salaries in additional contributions to several funds. So, actually her salary costs from an employers’ perspective are 15 times €2.500 = €37.500. Apart from the taxes she has to pay mandatory by law a self chosen healthcare costs insurance which costs her €116 per month, which equals a total of €1.400 per year.
Her big frustration is that you don’t get ahead in the Netherlands. Every time your salary increases, it’s being taxed away or you lose some kind of discount which leads to not keeping anything extra from your pay rise. So, she has a bold plan. Knowing that her employer has to pay 15 times her months salary, she proposes that she starts working as a freelancer and that she will receive one months salary, and the other two months are for the employer to keep. Her boss agrees and states that he is willing to hire her for at least half a year. But since she lives in the Netherlands, he also insists that she has to look for at least two other clients, since otherwise she will not be considered a real entrepreneur.
This is the time she reveals her real plan. She will move to Dubai!
This means she will be a supplier of services from outside the EU and her employer doesn’t have to worry at all about rather cumbersome laws in the Netherlands that define what a ‘real’ entrepreneur is. Laws that have been changed considerably in the last couple of years and probably will change the upcoming years again.
How she is going to do it and what is it going to cost
Her employer agrees with a monthly invoice, no advance payments, and a contract of at least half a year.
Once the lock down is over, she is going to move to Dubai en this is her plan.
She is going to deregister from the Netherlands and is going to rent a studio in Dubai. This used to be prohibitively expensive, but times have changed. Nowadays a Studio in Dubai is not that much more expensive than a studio in the Netherlands. The advantage of the studio’s in the Netherlands is that they tend to be bigger, the advantage of the studio’s in Dubai is that they tend to come with amenities like a communal pool and gym.
She will need a new health care insurance and since she is not that old this relatively cheap;
€2.000 per year; yet more expensive than in the Netherlands.
She needs a license of her own company, in order to obtain a visa
€3.000 for the license
€1.000 for the visa, including the fee to obtain an additional driving license.
She knows that if you – for whatever reason – become disabled in the Netherlands, you are in a welfare state and part of the high taxes are being used to give disabled people an allowance. To her frustration, this is also true for people suffering from burn-outs and other issues she has difficulty with taking seriously, but she is going to take disabled-due-to-accident insurance for:
€500 per year.
Also, she is going to make a reservation for her tickets to and from DXB, as Dubai International Airport is known.
€1.000 since she knows that Transavia has cheap tickets and even Emirates has them too.
Since this is going to be all-new for her, she decides to hand over all the paperwork to an attorney who is knowledgeable about the Dutch tax system, and the company set up rules in the UAE. He charges €2.500 for setting everything up from A to Z.
She knows she is going to need a VPN and knows that she will have to phone the Netherlands quite regularly the old fashioned way. Therefore she books:
€500 per year for additional communication costs.
Food is approximately 10% more expensive than in the Netherlands. And just like in the Netherlands your final bill will depend hugely depending on you being on the hunt for discounts or you being the person that tosses in everything in the cart without looking at the price. And it’s being balanced also a bit since she will need fewer clothes. In the Netherlands, she has 5 coats. One for cold winter with snow, one for wet winter, one for spring when it might rain, one light one for summer and one windproof for autumn. Same holds for shoes. She is looking forward to doing her work on slippers.
For kinda the same reason she does not pay attention to the costs of the chiller / air conditioning. In the Netherlands you pay for heating, in Dubai you pay for cooling and although in the end cooling will be a bit more expensive,
She is pondering about – finally ! – owning her own car, since gas is about €0,50 per liter and since cars are really very cheap, but decides to wait with a final decision until she actually arrives in Dubai.
Final rough calculations
If she balances the €10.500 in tax per year alone (and she purposefully forgets about the huge difference in VAT which is 21% in the Netherlands and 5% in the UAE) against
- €2.500 attorney, one-off
- €3.000 company, per year
- €500 visa (to be paid every two years)
- €1.000 tickets, per year
- . €500 disability insurance, per year
- €2.000 health care insurance, per year
- . €500 extra communication costs, per year
To be paid per year: €7.500
To be paid once: €2.500
So that would save her €2.500 per year. Year after year. As long as her current employer is willing to hire her. And why shouldn’t he? No more:
- Housing costs
- Communication costs
Which will make her one of the cheapest resources available! And…no worries about tax rules that dictate that she actually isn’t a freelancer but an employee.
Her furniture, and why she is not going to ship it.
Susan doesn’t have a lot of furniture. And she discovered that shipping would add an additional €2.000. Since a lot of people in the UAE come and go, there is a very lively second-hand market in second-hand-everything. And moving the stuff in Dubai is cheap too; literally thousands of movers are ready to move goods from one apartment to the other for prices that are four or five times as low as in the Netherlands. So she made up her mind; she will take 30 kilos of her belongings once it’s allowed to travel again, and the rest will be bought over there. She started selling some stuff today at marktplaats,nl
The real reason why she is going to do it.
Just one; every additional € she makes is hers to keep for 100%
No questions asked.