Do I Need a Local Entity to Hire in Netherlands?

In the Netherlands, a "local entity" refers to a recognized employing presence, such as a subsidiary or branch office, that allows you to fulfill local payroll and employment obligations. This setup is essential for managing employee contracts, tax withholdings, and social security contributions.

Without establishing a local entity, you generally can't register as an employer or run compliant payroll. Fortunately, an Employer of Record (EOR) offers a viable alternative, enabling you to hire employees without the complexities of setting up a local business.

What is Required to Employ Someone in Netherlands?

• Local employing entity required to directly employ? Yes (unless using an EOR)
• Payroll registration required? Yes (you must register with the Dutch Tax and Customs Administration)
• Withholding/tax remittance required? Yes (mandatory payroll tax withholdings apply)
• Social contributions required? Yes (employers must contribute to social security)
• Local employment agreement required? Yes (written contracts are standard practice)
• Mandatory benefits to budget? Yes (includes holiday pay, sick leave, and pension contributions)
• Works council/collective agreements considerations? Often (many sectors have collective labor agreements)

Best Options If You're Hiring in Netherlands

Can I Hire Contractors Instead of Setting Up an Entity?

Yes, but be cautious about misclassification risks.

While hiring contractors can be a flexible option, the Netherlands has strict regulations regarding worker classification. If a contractor is deemed to be functioning like an employee, you could face legal repercussions. It's essential to ensure that contractors operate independently and are not integrated into your business operations.

• Ensure the contractor has multiple clients to avoid exclusivity.
• Limit your control over how the work is done to maintain independence.
• Avoid embedding contractors in your organizational structure.

How Long Does Entity Setup Take And What Does It Cost?

Typical entity setup timeline: It often takes 4–8 weeks to set up an entity in the Netherlands, depending on the specific registrations required.

Ongoing cost categories (entity route):

• Accounting, bookkeeping, and statutory filings: Estimated €200–€600 per month ($220–$660)
• Payroll provider: Estimated €15–€50 per employee per month ($16–$55)
• Employer registrations and recurring compliance: Varies by complexity
• Corporate tax filings and annual reporting: Estimated €1,000–€3,000 per year ($1,100–$3,300)

EOR cost components (no-entity route):

• A per-employee EOR service fee (from $399 per month with Playroll)
• Pass-through statutory costs (e.g., employer social security contributions)
• Any optional benefits you choose to provide beyond statutory minimums

How an Employer of Record Can Help You Hire in Netherlands

Hiring in the Netherlands can be complex, but it doesn’t have to require setting up a local entity or taking on long-term overhead. With an Employer of Record like Playroll, you get a simple, predictable way to hire compliantly while keeping costs transparent and under control. We help you:

• Hire employees in the Netherlands quickly without establishing a local entity, eliminating incorporation costs and ongoing administration.
• Stay fully compliant with local payroll, tax, and employment regulations with Playroll’s managed payroll services.
• Control your total employment costs, with a clear monthly EOR service fee (from $399 per employee).
• Focus on growing your business, while we manage contracts, payroll, compliance, and labor law obligations end to end.
• Scale up or exit the market easily, without the financial or legal burden of closing a local entity.