How Can a Company Put an Employee on Payroll in the Netherlands?
A company can put an employee on payroll in the Netherlands in three ways: through its own Dutch entity, by registering as a foreign employer (NRP) with the Dutch Tax Administration (Belastingdienst) and running Dutch payroll, or through an Employer of Record (EOR). If you have no Dutch entity yet, an EOR is usually the fastest route, because the EOR becomes the legal employer and handles the contract, wage tax, social security and Dutch labour law for you.
Three legal routes: Dutch entity, payroll services or EOR
The routes differ in who the legal employer is and what must be in place before the first salary is paid.
| Own Dutch entity | Payroll services (NRP) | EOR | |
| Legal employer | Your Dutch company | Your foreign company | The EOR’s Dutch entity |
| Dutch entity needed? | Yes | No, but you must register as a foreign employer | No |
| Prerequisites | Incorporation via a Dutch notary (for a BV), Chamber of Commerce (KVK) registration, bank account, wage tax registration | Wage tax registration (loonheffingennummer) with the Belastingdienst, Dutch employment contract, HR and legal know-how | Signed service agreement with the EOR |
| Who handles Dutch labour law | You | You | EOR |
| Payroll processing | In-house or outsourced | Usually outsourced to a Dutch payroll provider | EOR |
| Typical time to first payroll | Several weeks to months if the entity still has to be set up | A few weeks | Days to a few weeks |
| Best for | Long-term, growing presence | Companies with Dutch HR expertise in-house | First hires, market testing |
Without a Dutch entity, also check permanent establishment risk: depending on their role, for example if they sign contracts on your behalf, a Dutch employee can create a taxable presence for your company.
Step 1: Choose who will employ your Dutch hire
This decision determines who signs the contract and who registers with the Dutch authorities.
- Already have a Dutch entity? Register it as an employer for wage taxes and run payroll in-house or through a payroll provider.
- No Dutch entity and a first or small team? Use an EOR. The EOR employs your hire on its Dutch payroll, you manage the work.
- Want to be the employer without a Dutch entity? Register as a NRP (Non-Residential Payroll) for wage taxes and outsource payroll processing. You carry all employer obligations.
- Planning a lasting Dutch presence? Set up a Dutch entity. Many companies start with an EOR and move employees over once the entity is ready.
Step 2: Prepare a Dutch employment agreement
Mandatory Dutch employment law applies to anyone working in the Netherlands, whatever law the contract names.
Make sure the agreement covers:
- Contract type: fixed-term or permanent. After three fixed-term contracts, or three years, the next contract becomes permanent.
- Probation period: none for contracts of six months or less, up to one month for fixed-term contracts up to two years, up to two months for permanent contracts.
- Salary: at least the Dutch statutory minimum wage, plus holiday allowance (vakantiegeld) of at least 8% of gross salary.
- Holiday: at least four times the weekly working hours per year, which is 20 days for a full-time employee.
- Collective agreement (CBA): check whether a sector CBA applies, as it can set higher pay, allowances or a mandatory pension scheme.
- Written information: employees must receive their key employment terms in writing, most of them within the first week.
Step 3: Collect the payroll inputs
Dutch payroll cannot run until the employer and employee data are complete. Collect these before the first payroll cut-off:
- From the employee: citizen service number (BSN), valid ID, bank account (IBAN), address and a signed wage tax statement (opgaaf gegevens voor de loonheffingen), which includes whether the wage tax credit (loonheffingskorting) should be applied.
- Right to work: EU/EEA and Swiss nationals can work freely. Other nationals need a valid residence and work permit, for example as a highly skilled migrant.
- From the employer: wage tax number, start date, gross salary, working hours, pay frequency and any allowances or benefits.
- Possible 30% ruling: qualifying employees recruited from abroad may receive part of their salary tax-free. The employer and employee apply together, ideally before the first payroll.
Step 4: Run the first Dutch pay cycle
Most Dutch employers pay monthly. The first cycle follows these steps:
- Calculate gross to net: withhold wage tax and national insurance contributions, apply the wage tax credit if chosen, and deduct any employee pension contribution.
- Calculate employer costs: employee insurance premiums (such as unemployment and disability insurance) and the employer’s income-related health insurance contribution (Zvw).
- Reserve holiday allowance: accrue at least 8% of gross salary each month. It is usually paid out in May or June.
- Issue the payslip and pay the net salary to the employee’s bank account.
- File the payroll tax return (loonaangifte) and pay the wage taxes to the Belastingdienst, by the end of the month following the pay period.
From day one, the employer also needs an occupational health service (arbodienst). If the employee falls ill, Dutch law requires the employer to continue paying at least 70% of salary for up to two years. A sickpay insurance allows you to receive compensation if an employee is absent due to illness.
Example: what you need for the first pay cycle
For a company hiring its first employee in the Netherlands, this is the full set of inputs for payroll month one.
| Category | What is needed | Provided by |
| Employee information | Full name, address, date of birth, BSN, copy of ID | Employee or Employer |
| Employee information | Bank account (IBAN) | Employee |
| Employee information | Signed wage tax statement, incl. wage tax credit choice | Employee |
| Employee information | Residence and work permit (non-EU/EEA nationals only) | Employee |
| Contract details | Start date, contract type and duration, probation period | Employer |
| Contract details | Job title, working hours per week, work location | Employer |
| Contract details | Applicable CAO, if any | Employer |
| Pay inputs | Gross monthly salary, holiday allowance percentage | Employer |
| Pay inputs | Allowances and benefits (travel, home office, bonus) | Employer |
| Pay inputs | Pension scheme and contribution split, if any | Employer |
| Employer decisions | Route: own entity, payroll-only or EOR | Employer |
| Employer decisions | Apply for the 30% ruling, if the employee qualifies | Employer and employee |
| Employer decisions | Holiday entitlement above the statutory minimum | Employer |
With an EOR, the EOR handles the registrations, contract and calculations; you supply the contract details and pay inputs.
Frequently asked questions
Can a foreign company hire in the Netherlands without a Dutch entity? Yes. Either through an EOR, which employs the worker on your behalf, or by registering as a foreign employer for Dutch wage taxes and running Dutch payroll.
Can I pay a Dutch employee through my home-country payroll? Generally not. Someone working in the Netherlands is usually subject to Dutch wage tax and social security, which must be withheld and reported through a Dutch payroll. Short-term postings from another EU country follow separate rules.
Can I hire them as a contractor instead? Only if the relationship is genuinely independent. If you direct the work like an employer, Dutch authorities can treat it as employment, with back taxes and premiums as a result.
What is the difference between an EOR and payroll-only? With an EOR, the provider is the legal employer and carries employer obligations. With payroll-only, your company is the employer and the provider only processes salaries and tax filings.
How long does it take to run the first payroll? With an EOR, often within a few weeks of signing. Registering as an employer or setting up an entity takes longer.
How Parakar helps companies hire in the Netherlands
Parakar brings over 25 years of international HR experience and employs people in the Netherlands through its own Dutch entity. We offer both EOR and payroll services, so you can start with EOR for your first Dutch hire and move to payroll support once you have your own entity, without changing provider.
Putting your first employee on Dutch payroll? Talk to a Parakar specialist about the right route for your company.
Get in touch
