The Netherlands continues to attract international businesses thanks to its strategic location, strong economy, and highly skilled workforce. Whether you’re expanding into Europe or seeking to tap into Dutch talent for your global team, hiring in the Netherlands presents significant opportunities.
However, setting up a legal entity such as a Dutch BV (Besloten Vennootschap) can be complex, costly, and time-consuming, mainly if you are testing the market or only looking to hire a few employees.
For companies that want to hire Dutch employees without the burden of incorporation, a Dutch Employer of Record offers an efficient and compliant solution. In this guide, I’ll walk you through the challenges of hiring in the Netherlands without an entity, explain how an EOR operates, and show how it can help you hire quickly and compliantly.
Challenges of hiring in the Netherlands without an entity
The Netherlands has strict labour laws and regulatory frameworks to protect employees. Foreign companies cannot simply hire staff without meeting these requirements, and establishing a proper legal presence is normally required. This typically means forming a Dutch BV or opening a branch office, each of which involves extensive documentation, tax registration, notarial services, and ongoing compliance.
Even without an entity, you’re still subject to Dutch employment laws if you engage local staff. This includes requirements for formal employment contracts, statutory benefits like holiday allowance (vakantiegeld), social security contributions, wage tax deductions, and compliance with collective labour agreements (CAOs) in many sectors.
Hiring Dutch employees without an entity also carries risks:
- Misclassification: Treating workers as independent contractors when they function as employees can lead to fines, back payments, and reputational damage.
- Tax penalties: Failing to withhold the appropriate taxes or register with the Belastingdienst (Dutch Tax Authority) can result in significant liabilities.
- Employee claims: If you are not compliant with Dutch labour laws, employees can challenge their status, leading to disputes and legal costs.
What is an Employer of Record (EOR) and how does it work in the Netherlands?
An Employer of Record is a service provider that legally employs your Dutch staff on your behalf. The EOR becomes the legal employer for administrative purposes, handling employment contracts, payroll, taxes, and compliance, while you maintain complete control over the employee’s day-to-day activities and role.
In the Netherlands, a Dutch EOR assumes responsibility for:
- Drafting and managing legally compliant employment contracts in line with Dutch labour laws and applicable CAOs.
- Processing payroll, deducting wage tax, and managing social security contributions including pensions and health insurance.
- Administering statutory benefits such as holiday pay, sick leave, maternity/paternity leave, and managing leave balances.
- Ensuring compliance with GDPR requirements, health and safety regulations, and maintaining proper employment records.
This arrangement enables your business to employ Dutch-based staff legally, without the need to establish a BV or any local entity. The EOR acts as the employer of record in the eyes of the authorities, while you retain practical management of your team.
For example, when a US-based SaaS company wanted to expand its European client support operations, the Netherlands was its first choice. However, setting up a Dutch BV would have delayed their plans by months, and they only needed a small, local team to start.
To move faster, they started working with a Dutch Employer of Record. Within a few weeks, their first employees were onboarded under fully compliant Dutch employment contracts. The EOR managed payroll, tax contributions, and social benefits, while the company focused entirely on growing its market presence. Thanks to the EOR solution, they avoided the high costs and legal complexities of setting up a legal entity. They were able to validate the market before committing to further investment.
Legal and tax compliance through a Dutch EOR
Compliance in the Netherlands is detailed and highly regulated. A local EOR ensures that your employees are registered with the Belastingdienst for tax purposes and that all payroll reporting is accurate and on time. They manage wage tax deductions and social insurance contributions, avoiding any issues with Dutch tax authorities.
Additionally, working with an EOR reduces the risk of employee misclassification. If a company incorrectly classifies workers as independent contractors rather than employees, it can result in backdated tax liabilities and legal penalties. A reputable EOR ensures employees have proper employment status, mitigating these risks.
An EOR will also assist in adhering to GDPR standards, ensuring that all personal data related to employment is handled appropriately, and guaranteeing that health and safety policies meet Dutch standards, including for remote workers.
Business benefits of using an EOR in the Netherlands
Hiring through an EOR offers several advantages:
1. There’s no need to incorporate a Dutch entity. This significantly reduces both time and costs. Instead of spending months registering a company and setting up local infrastructure, you can hire employees within weeks.
2. Working with an EOR lowers your administrative burden. Payroll, benefits management, tax filings, and compliance monitoring are all handled by the EOR, freeing your internal team to focus on business activities.
3. Using an EOR provides flexibility. It’s an ideal solution for companies looking to test the Dutch market with a small team or for businesses managing remote or hybrid workforces. Whether you’re hiring one employee or scaling a project team, an EOR model can scale with your needs.
Use cases: when hiring via an EOR makes sense
Hiring through an EOR is particularly useful in several scenarios:
- When you want to employ one or two Dutch staff before deciding on long-term market expansion.
- When you’re testing market potential and need to validate demand without major financial commitment.
- When your global team needs to bring onboard a Dutch employee for specialised skills or local market knowledge.
- When you want to ensure compliance with Dutch labour laws without managing the complexity of setting up and running a local payroll system.
An EOR model is not just a stopgap; it can be a long-term solution for companies that prefer to operate lean and agile across multiple markets without establishing local subsidiaries in each one.
Hire employees with ease in the Netherlands
Hiring employees in the Netherlands without establishing a legal entity can be complex if attempted independently. Dutch employment law is robust and protective of workers, and failure to comply can lead to serious tax, legal, and financial consequences.
Using a Dutch Employer of Record offers a fast, compliant, and efficient solution. It enables you to access top Dutch talent without the delays and expense of setting up a local company. Whether you’re exploring the market, hiring key remote team members, or scaling your European operations, working with an EOR provides the flexibility and security your business needs.
Ready to hire in the Netherlands without the hassle of setting up an entity? Contact our team to discover how a Dutch Employer of Record can help your business expand compliantly and efficiently.