Expanding a business into the Netherlands does not always require opening a local company or establishing a physical office. Foreign businesses can recruit Dutch professionals, build remote teams, work with local employment partners, and manage international operations through several arrangements. This flexibility makes the Dutch employment market accessible to companies that want to test a new market before making a long-term investment.

However, hiring employees in another country involves more than finding suitable candidates and agreeing on salaries. Employers must consider payroll taxes, social security contributions, employment agreements, work permits, employee benefits, and Dutch labour regulations. The correct hiring structure depends on where the employee works, the nature of the employment relationship, and whether the foreign business has a permanent establishment in the country.

Why Foreign Businesses Can Hire Employees in the Netherlands Without Establishing a Local Company

Foreign businesses do not necessarily need to complete a company setup netherlands process before accessing the country's workforce. Dutch regulations distinguish between having a permanent establishment, carrying out business activities without a permanent establishment, and employing personnel through an intermediary.

This distinction gives international companies several possibilities when recruiting local professionals. A business headquartered in the United States, the United Kingdom, India, or another country may employ Dutch-based professionals without automatically creating a Dutch subsidiary.

According to Business.gov.nl, foreign businesses without a permanent establishment generally do not have to register with the Dutch Chamber of Commerce (KVK). However, tax registration may still be necessary when the company has Dutch VAT or payroll tax obligations. Different registration requirements also apply to businesses supplying workers in the Netherlands.

The arrangement selected for hiring should reflect the actual working relationship rather than simply the company's preference for avoiding registration.

For example, a technology company headquartered outside Europe may want to recruit a Dutch software engineer to manage regional clients. The company could consider an Employer of Record (EOR) arrangement or direct foreign-employer registration, depending on its operational requirements.

Similarly, an international consultancy might engage a genuinely independent Dutch consultant for a specific project instead of establishing a permanent employment relationship.

The important consideration is whether the chosen structure complies with Dutch employment, taxation, and social security requirements.

Five Hiring Options Available to Foreign Businesses

Foreign companies have several practical routes for recruiting professionals in the Netherlands. Each option offers a different balance of control, administrative responsibility, cost, and flexibility.

1. Employer of Record (EOR) Services

An Employer of Record is a third-party organisation that legally employs workers on behalf of a foreign business. The international company manages the employee's daily responsibilities, while the EOR handles formal employment administration.

This arrangement is particularly useful for businesses that want to recruit Dutch professionals without establishing their own local subsidiary.

An EOR generally manages:

• Employment agreements that comply with Dutch requirements.

• Monthly salary payments and payroll administration.

• Wage tax withholding and applicable social security contributions.

• Holiday allowances and statutory employee entitlements.

• Employment documentation and administrative records.

• Certain onboarding and termination procedures.

For example, a Canadian software company wants to hire three Dutch developers to support a European product launch. Establishing a local company may not be commercially justified at this early stage.

An EOR can provide an employment arrangement for those professionals while the Canadian company concentrates on product development, project management, and customer acquisition.

Advantages: Faster market entry, reduced administrative workload, and no immediate requirement to establish a Dutch subsidiary.

Limitations: Service fees increase employment costs, and the company has less direct control over certain formal employment processes. The EOR arrangement also does not automatically remove every tax, immigration, or permanent establishment risk for the foreign business.

2. Direct Employment Through Foreign Employer Registration

A foreign company may also employ Dutch-based professionals directly without creating a separate Dutch legal entity.

However, this arrangement requires the employer to assess its Dutch payroll tax responsibilities and complete the relevant registration procedures.

The Dutch Tax Administration provides a registration process for foreign companies. When an organisation is required to withhold payroll taxes, it must register as an employer before employing staff.

Following registration, the company receives a payroll tax number, known as a loonheffingennummer, which is used for payroll tax returns and communication with the tax authorities. The Tax Administration states that this number and the associated return information are usually issued within one week after registration.

This option works well for companies planning to maintain a long-term relationship with Dutch employees while retaining direct responsibility for employment administration.

For instance, an international marketing agency may recruit a Netherlands-based sales manager to develop local business relationships. The foreign company remains the employer and manages the employee's responsibilities directly.

Before choosing this structure, businesses should assess:

• Whether Dutch wage tax withholding is required.

• Which social security system applies.

• Whether employee insurance contributions are payable.

• Which Dutch employment rules apply to the agreement.

• Whether the activities could create a permanent establishment.

Florintax can assist foreign businesses with assessing the tax and registration implications before direct employment begins.

3. Hiring Through a Dutch Recruitment or Staffing Agency

Recruitment agencies offer another route for international businesses that need local talent without building an internal recruitment department.

A recruitment agency generally sources candidates, evaluates applications, arranges interviews, and helps businesses identify suitable professionals. Depending on the contractual structure, the agency may simply introduce candidates or supply workers under a staffing arrangement.

The distinction is important.

A recruitment agency that only introduces candidates does not automatically become the legal employer. The foreign business may still need to enter into an employment agreement and manage its payroll obligations.

In contrast, a staffing company may employ the workers and assign them to the client business.

Foreign businesses should verify that staffing intermediaries meet the applicable Dutch registration requirements. Under the Waadi rules, foreign businesses supplying workers on a paid basis in or to the Netherlands must register in the Dutch Business Register, even when they do not have a Dutch branch.

This approach is suitable for businesses that need temporary staff, specialised professionals, or additional recruitment support.

Practical example: A foreign logistics company wants to hire warehouse supervisors for a temporary Dutch project. A registered staffing agency can help supply suitable workers without requiring the foreign company to create its own recruitment infrastructure.

4. Engaging Independent Contractors

Independent contractors provide another flexible hiring option for foreign businesses.

A company may engage a Dutch freelancer or self-employed professional to perform specific services under a commercial agreement. The contractor generally manages their own business activities, invoices the client, and handles their business tax administration.

This approach can be appropriate for:

• Software development projects.

• Graphic design and creative assignments.

• Business consulting.

• Translation and localisation.

• Marketing campaigns.

• Short-term technical assignments.

However, the contract's title does not determine whether someone is genuinely self-employed.

Dutch authorities assess the actual working relationship. If the company controls the individual's working hours, methods, responsibilities, and day-to-day activities in a manner resembling employment, the relationship may be treated as employment rather than independent contracting.

The Dutch government has increased enforcement against false self-employment, making classification an important consideration for international employers.

A contractor agreement should clearly establish the scope of services, payment arrangements, professional independence, responsibility for deliverables, and termination conditions.

Practical example: An Australian e-commerce company hires a Dutch marketing consultant for a three-month market research assignment. The consultant works independently, invoices the company for agreed deliverables, and provides services to other clients.

This arrangement may be appropriate when the commercial relationship genuinely reflects independent business activity.

5. Seconding Existing Employees to the Netherlands

Foreign companies with established international teams may also consider seconding existing employees to the Netherlands.

Under this arrangement, an employee remains connected to the foreign organisation but temporarily performs professional duties in the Netherlands.

This can be useful when a company needs to establish regional management, support a client project, or transfer specialised technical knowledge.

However, secondment does not remove Dutch employment and tax obligations.

The Dutch Tax Administration explains that a foreign employer posting or seconding an employee to work in the Netherlands may be required to register as an employer and withhold applicable payroll taxes. Social security responsibilities depend on the relevant European regulations, international agreements, and national legislation.

Companies should also examine whether an employee remains covered by their home country's social security system or becomes subject to Dutch social insurance.

For employees temporarily posted from EU countries, an A1 certificate may be relevant when the applicable conditions are satisfied.

Similarly, businesses sending employees from outside the EU must examine the relevant immigration and work authorisation requirements.

Payroll Taxes and Employment Obligations for Foreign Employers

Selecting a hiring method is only one part of entering the Dutch employment market. Foreign employers must also understand the financial and administrative obligations attached to their workforce.

Dutch payroll regulations may apply even when the employer's registered office is located in another country.

The main responsibilities generally involve the following areas.

Wage tax withholding: Employers required to act as withholding agents must calculate and deduct the applicable wage tax from employee salaries before making payments.

Social security contributions: Depending on the employee's circumstances, the employer may need to pay Dutch national insurance and employee insurance contributions.

Holiday allowance: Dutch employees are generally entitled to a statutory holiday allowance of at least 8% of their gross annual salary, subject to applicable exceptions.

Minimum wage: Employers must comply with the statutory minimum hourly wage applicable to the employee's age and employment situation.

Working conditions: Health and safety requirements, working hours, leave entitlements, and other mandatory employment protections must be considered.

Employment documentation: Agreements should clearly describe salary, working hours, responsibilities, holiday entitlements, notice arrangements, and applicable employment conditions.

Additionally, collective labour agreements (CAOs) may apply to particular industries. These agreements can establish additional salary scales, working conditions, and employee benefits.

Work Permits and Immigration Requirements for International Recruitment

Another important consideration is the employee's nationality and existing right to work in the Netherlands.

EU, EEA, and Swiss nationals generally have free access to the Dutch labour market. Employers can recruit these professionals without obtaining a standard Dutch work permit.

However, employees from countries outside these groups may require additional immigration authorisation.

For regular paid employment, a work permit (TWV) or combined residence and work permit (GVVA) may be necessary, depending on the employment circumstances.

Highly skilled migrants have a separate immigration route. Under this arrangement, the employer generally needs to qualify as a recognised sponsor with the Dutch Immigration and Naturalisation Service (IND), and the employee must satisfy the applicable salary and other conditions.

These requirements are particularly relevant for technology businesses, engineering companies, and international organisations recruiting specialised professionals.

A foreign company should not assume that using an EOR automatically resolves every immigration requirement. The legal employer, sponsorship arrangements, and employee's immigration status must be checked before work begins.

The Netherlands Enterprise Agency provides information about foreign personnel, while the IND publishes the relevant immigration procedures.

Can an Article 23 License Help Foreign Businesses?

Foreign companies importing goods into the Netherlands may encounter another tax consideration that is separate from employee hiring: import VAT.

An article 23 license is relevant to the Dutch reverse-charge mechanism for import VAT. It allows qualifying businesses to account for import VAT through their periodic VAT return rather than paying the amount immediately to Dutch Customs.

This arrangement can improve cash flow for businesses that regularly import products from countries outside the European Union.

For example, an international electronics distributor importing inventory from Asia into the Netherlands may need to consider how import VAT affects its working capital.

There is an important distinction for foreign entrepreneurs. According to the Dutch Tax Administration, a foreign business cannot independently apply for an Article 23 permit. It can appoint a Dutch tax representative who may apply for the permit on its behalf.

The tax representative can also handle relevant VAT declarations and import-related administration. Depending on the representation arrangement, the foreign business may not need to register separately with the Tax Administration for VAT.

However, this permission is not a hiring permit, payroll registration, or general business authorisation. It should not be confused with the registrations required for employing Dutch personnel.

Businesses involved in importing and distributing goods while building a Dutch workforce should evaluate their employment and indirect tax responsibilities separately.

How Much Does Hiring in the Netherlands Cost?

Employment expenses vary according to the hiring arrangement, industry, salary level, employee experience, and additional benefits.

There is no single cost applicable to every foreign business recruiting in the Netherlands.

An EOR arrangement generally involves the employee's salary, employer contributions, statutory benefits, and an additional service fee. Direct employment avoids some intermediary costs but transfers payroll administration and compliance responsibilities to the foreign employer.

Independent contractors generally charge an agreed project fee or hourly rate, although the business must first establish that the relationship qualifies as genuine self-employment.

A staffing agency may charge a recruitment fee, hourly markup, or other contractual amount depending on the service.

Companies should also consider the long-term financial consequences of each arrangement.

For example, an EOR may be cost-effective when recruiting one or two employees. However, businesses planning to develop a large Dutch workforce may eventually find direct employment through their foreign organisation or establishing a local subsidiary more practical.

Florintax can help assess the tax implications and administrative costs associated with different international employment structures.

Research and Labour Market Conditions Make the Netherlands an Important Hiring Destination

The Netherlands continues to offer international employers access to a substantial and active workforce.

Statistics Netherlands (CBS) reported approximately 40 job vacancies per 1,000 jobs at the end of December 2025. Its labour market indicators also recorded a job vacancy rate of 3.9% in 2025.

Second, compensation and employment conditions should reflect the expectations of the Dutch labour market. An attractive salary alone may not be sufficient to secure experienced candidates. Flexible working arrangements, professional development, pension benefits, and a positive workplace culture can also influence recruitment outcomes.

Technology, finance, logistics, engineering, and professional services companies may particularly benefit from preparing a structured recruitment strategy before entering the market.

A Practical Process for Hiring Without a Dutch Legal Entity

A clear hiring process can reduce administrative mistakes and prevent unnecessary expenses.

The following sequence provides a useful framework for international businesses.

Foreign hiring process

1. Define the employment requirement
   Determine whether the role requires a permanent employee, temporary professional, independent contractor, or seconded worker.

2. Select the appropriate hiring structure
   Compare EOR services, direct foreign-employer registration, recruitment agencies, and contractor agreements.

3. Check tax and registration obligations
   Review payroll withholding, social security, VAT responsibilities, and any applicable KVK registration requirements.

4. Verify work authorisation
   Check the employee's nationality, residence status, and permission to work in the Netherlands.

5. Prepare compliant employment documentation
   Establish salary, benefits, responsibilities, working hours, leave, and termination conditions.

6. Set up payroll and ongoing administration
   Arrange salary payments, tax returns, employee records, and statutory contributions.

A useful practice is to complete a compliance review before issuing an employment offer. This gives the company time to identify unexpected obligations and select an appropriate hiring arrangement.

Similarly, keeping separate records for payroll, VAT, employee contracts, and international assignments makes ongoing administration easier.

Common Mistakes Foreign Businesses Should Avoid

Even when a company chooses not to establish a Dutch subsidiary, mistakes in employment classification and tax administration can create financial and legal complications.

Several issues deserve particular attention.

Assuming that no local entity means no local tax obligations: A foreign employer may still have to register with the Dutch Tax Administration and withhold payroll taxes.

Treating every professional as a contractor: A freelancer agreement does not automatically establish independent employment status. The actual working relationship matters.

Ignoring immigration requirements: Non-EU employees may require specific work and residence authorisation before starting employment.

Selecting an unverified intermediary: Businesses should check the registration status and reliability of EOR providers and staffing agencies.

Overlooking collective labour agreements: Industry-specific employment conditions may affect compensation and other contractual arrangements.

Failing to evaluate permanent establishment exposure: The activities of employees working in the Netherlands may create tax considerations for the foreign organisation, depending on the circumstances and relevant tax treaty.

Despite the appeal of a quick market entry, a hiring decision should always be evaluated against the company's long-term operating model.

How Florintax Can Support Foreign Businesses Entering the Dutch Market

International employment requires coordination between corporate planning, payroll administration, and tax compliance. Businesses unfamiliar with Dutch procedures may find it difficult to determine which obligations apply to their particular structure.

Florintax can support foreign businesses with tax-related planning and guidance when evaluating their Dutch operations.

Professional assistance can be particularly useful when a company needs to:

• Assess Dutch payroll and employer registration requirements.

• Review tax responsibilities associated with foreign employees.

• Evaluate the implications of international employee assignments.

• Understand VAT registration and tax representation requirements.

• Assess import VAT arrangements and relevant permissions.

• Identify potential permanent establishment considerations.

• Plan an appropriate structure for future business expansion.

Similarly, businesses that already have employees in several European countries can benefit from reviewing their international employment and tax arrangements together.

Early professional advice can help avoid expensive restructuring and reduce the possibility of unexpected tax liabilities.

Conclusion

Hiring in the Netherlands without establishing a local legal entity is a practical option for foreign businesses seeking access to Dutch professionals. Employer of Record services, direct foreign-employer registration, recruitment agencies, independent contractors, and employee secondment arrangements all offer different ways to build a workforce.

However, the absence of a Dutch subsidiary does not automatically remove local employment, payroll, immigration, or tax responsibilities. Companies must assess the actual working arrangement, employee status, applicable social security rules, and registration requirements before recruiting.