It is allowed that a knowledge migrant salary is in part paid back to the employer’s bank account in order to repay a loan with interest. The immigration chamber of the court of Rotterdam has recently decided this issue in favor of one of Mynta Law’s clients. It may seem obvious that, like any salary, also a knowledge migrant salary may be spent as the employee deems fit, but it is no secret the Immigration and Naturalisation Service (IND) and the Inspectorate for Social Affairs and Employment (Inspectorate SZW) regard any money flow from the knowledge migrant back to the employer’s bank account with real suspicion.

Knowledge migrant salary spent on repayment of mortgage with employer

The facts. A Chinese knowledge migrant works at the local branch of a Chinese business. She and her family decide to buy a house in the Netherlands. After finalizing the purchase, the process of obtaining a mortgage from a large Dutch bank is slowed down by the bank’s general bureaucracy. In order to avoid a hefty penalty, she calls up her superiors at the head office in China, asking if the company perhaps could grant her a mortgage. An unusual request for most Dutch employees, but not entirely unheard of. The tax office does have specific rules for this situation. The head office agrees, but sets the interest rate at a level that is normal in China, but much higher than the low interest rate in the Netherlands. Still, the knowledge migrant is happy. She does not have to let go of the house, does not incur a penalty for late payment, and she avoids the bureaucracy of a Dutch bank using rules and systems that she is unfamiliar with.

During a routine inspection a few years later, the Inspectorate SZW and the IND find out that the employee has for some time paid back large parts of her knowledge migrant salary to her own employer’s bank account. Alarm bells go off. The authorities suspect this combination of a high net salary and an equally high interest rate, and are convinced this arrangement must somehow be abusive. The government even claims, but cannot substantiate, that the arrangement must have been at the employer’s initiative, and link the arrangement to a decline in sales. Everything aimed at pinning an evasion case on the knowledge migrant and her family.

No evasion, therefore knowledge migrant salary arrangement is allowed.

But the government cannot deny the existence of the loan. There is plenty correspondence between the employee and the bank that she initially approached for a mortgage. It is established that, indeed, it was the company paying directly to the notary’s office for the purchase of the employee’s house. Also, the knowledge migrant and her employer have put down their arrangement in writing, and they both keep a precise record of the outstanding debts. Finally, the employer does not withhold any repayment from the knowledge migrant salary, instead paying out the full net salary and leaving it to the knowledge migrant herself to pay back what she owes.

Inspectorate SZW, responsible for scrutinizing employers, at first threatens to slap the employer with a severe penalty for illegally employing a foreign national. But the company presents all the available documents and explains how the arrangement has come about. This argumentation is accepted. Inspectorate SZW acknowledges that, in these circumstances, no breach of the knowledge migrant salary norm can be established, and the company does not receive a penalty.

But the IND, responsible for dealing with the employee and her family, is not so easily put off. They proceed to withdraw the family’s residence permits, ordering them to leave the Netherlands at their own initiative. The facts, of course, are explained to the IND as well, but the government officials remain convinced of the evasive nature of the design of the mortgage.

The immigration chamber of the court of Rotterdam does not agree with the IND. In a recent interim judgment, it holds that a knowledge migrant salary first and foremost belongs to the knowledge migrant herself, and that she may in principle spend it in any way the law allows. Spending her net income on repayment of a loan with interest, provided by her own employer, may not be that usual in the Netherlands, but it is not entirely uncommon either, and certainly not illegal. Moreover, the circumstances surrounding the arrangement do show clearly there is no premeditated evasion of the knowledge migrant salary norm.

The court has now ordered the IND to rethink their decision, and has postponed further proceedings awaiting the IND’s reply.

Wider implications regarding knowledge migrant salary

The knowledge migrant policy is by far the most widely used employment based immigration policy in the Netherlands. The rules are simple: a knowledge migrant must be an employee of a so-called recognised sponsor, his or her salary must meet the applicable norms, and the highly skilled migrant salary must be competitive objectively (something that is not even widely assessed by the IND). Everything is clearly aimed at a subjective admission test in which the employer’s willingness to pay plays a key role. Recognised sponsors do not need to show each candidate’s diplomas and verified employment history (although the IND is known to make exceptions), and the IND regards the recognised sponsor as its “client”. The rules should be predictable and user-friendly for the IND’s clients’ sake. Undeniably, with more than one thousand applications per month, the policy really is a big success.

But there is another side to all this. At its conception in 2004, the key government advisors already noticed that any policy as subjective as the proposed knowledge migrant policy is inherently vulnerable to abuse. The knowledge migrant who is found out paying back sums of money to her own employer clearly reveals to the authorities the achilles heel of the policy they are called to execute. The officers’ findings certainly must have raised questions with them about the employer’s real willingness to pay, central to the admission of the knowledge migrant and her family. We do understand the IND’s iniital unease when they are confronted with an arrangement like this. Certainly, the government cannot be expected to allow all situations of repayment of salaries, since that would undermine the entire policy!

But the interim ruling clearly does not compel the IND to accept all occasions where a knowledge migrant salary is paid back to the employer. The court merely finds that, given the evidence, especially the fact that the arrangement in this case was clearly initiated from the employee’s side, was well-documented and that there was no deduction from the knowledge migrant salary, there is no valid claim for abuse of the knowledge migrant salary norm.

For more information about the knowledge migrant policy please send an email to Arend van Rosmalen