EOR vs. Company Setup in the Netherlands: Which Is Right for Your Business?

The Netherlands is widely recognized as Europe’s business gateway due to its strategic location, robust infrastructure, business-friendly environment, and highly skilled and international workforce. Being close to major European cities like Paris, London, and Frankfurt has further reinstated its significance in European trade after Brexit, absorbing the sudden growth of trade flows. 

I. Dutch Market Overview

International companies, especially those from Asia like Keypasco and Inter Area, have also been actively investing in the Dutch market for their European market expansion. Countries like China, Taiwan, Japan and South Korea have been engaging in local business activities related to finance, manufacturing, electronics, and technology.  There are two primary ways to enter the Dutch market: 

• Adopting an Employer of Record (EOR) service.
• Registering a business entity in the country. 

However, unfamiliarities with tax regulations, labor laws, and compliance requirements may seem daunting and complex. This article will walk you through a detailed comparison between these two options, helping you understand the pros and cons so you are informed to make decisions relevant to remote employment, financial investments, and strategic alignment with your business goals. 

II. Understanding Your Options: Dutch Business Setup vs. EOR

Before completing a Netherlands Business Registration, you’ll first need to understand which option to go for: using an Employer of Record (EOR) or establishing your legal entity. Both methods have their advantages and disadvantages, and the choice should primarily align with your business goals, resources, and timeline. 

A. Traditional Dutch Company Formation

When establishing a presence in the Netherlands, there are four different types of business registration based on entity type:

• Private Limited Company (BV).
• Public Limited Company (NV).
• Branch Office, and Representative.
• The most common route for foreign businesses is to register a private limited company (BV – Besloten Vennootschap), normally as a subsidiary, though other structures exist.
  
  You may find a chart of legal entity types below:

Setting up a Dutch BV involves document collections, and some complications may arise throughout the process. In situations where your mother company is not in the same country as your majority operation, you’ll need to ensure the authority statement of your company is issued by a notary public or a lawyer authorized to practice in the country where the mother company is based.

📌 Read more: How to hire and pay employees in the Netherlands

You may refer to the following general Dutch business setup process:

1. Step 1: Choose your business structure (BV is the most common).
2. Step 2: Draft articles of association (through a Dutch notary for BV/NV): prepare a business plan, entity structure chart, shareholder list, commercial extract, and certification of incorporation.
3. Step 3: Obtain a notarial deed of incorporation (for BV/NV).
4. Step 4: Register with the Chamber of Commerce (KvK) – this also triggers VAT and corporate tax registration.
5. Step 5: Open a Dutch business bank account: it’s recommended to apply to variant banks at the same time and see which bank has better efficiency in processing the application. (Bank choice: ING, ABN AMRO, Revolut, Rabobank).
6. Step 6: Register as an employer with the Dutch Tax and Customs Administration.
7. Step 7: Set up Netherlands payroll services if hiring employees.

Once you successfully hire someone in the Netherlands, you must comply with Dutch Labor Law, which provides worker protection in their work environment. 

Direct employment benefits in the Dutch labor market include:

1. Paid annual leave with a minimum of 20 days per year (for full-time, 5-day workweek). Many employers offer 25–30 days.
2. Public holidays (e.g., King’s Day, Liberation Day every 5 years, Christmas, and New Year).
3. Holiday allowance with 8% of the annual gross salary, paid at least once a year (usually in May).
4. Working hours are a maximum of 40 hours per week, typically spread over 5 days.
5. For sick leave, employers must pay at least 70% of the salary for up to 2 years.
6. 9 weeks paid parental leave at 70% salary (capped), plus additional unpaid leave rights.
7. Collective pension schemes under CAOs (Collective Labour Agreements).
8. Employer contributions shall cover unemployment, disability, and healthcare insurance.

With direct employment via a Netherlands business registration, your company can benefit from local market credibility, full control over operations, access to Dutch and EU talent, eligibility for subsidies and incentives, and EU labor mobility.

📌 Read our Dutch Employment Guide for more information.

B. Employer of Record (EOR)

An Employer of Record (EOR) is a third-party organization that legally employs staff on your behalf in a given country, while you retain full operational control over the work they do.  Slasify’s Employer of Record (EOR) simplifies the hiring process by acting as the legal employer for your team in the Netherlands, handling compliance, payroll services, and HR tasks, while allowing you to focus on managing your operations. This approach includes:

1. Local legal compliance: Ensuring Dutch employment contracts meet statutory requirements (e.g., holiday allowance, sick leave, and CAO-specific benefits).
2. Payroll accuracy & timeliness: Managing all Netherlands payroll taxes, social security contributions, and government filings in Dutch.
3. Multiple currency pay-out: Facilitating and processing payroll in local currencies to ensure employees receive accurate and timely pay. 
4. Speed to hire: Allowing businesses to onboard talent from 48 hours to 2 weeks instead of more than 6months it takes to incorporate.
5. Scalable workforce model: Enabling clients to test the Dutch market without committing to setting up a BV immediately.
6. Market entry advisory: Offering guidance on when it makes sense to transition from EOR to a Dutch entity.

There are several reasons why using an Employer of Record (EOR) through Slasify is a strategic choice. Factors that should be considered include:

III. Comparison: Dutch Entity Set Up vs Dutch Employer of Record

The choice between setting up a traditional Dutch entity and using an Employer of Record (EOR) for the Netherlands can have a significant impact on your speed to market, costs, compliance risk, and operational flexibility. The chart below outlines the six critical differences to help you make an informed decision.

IV. Strategic Considerations for Expanding Businesses into the Dutch Market 

A. Dutch Employment Law Complexities

Dutch Labor Law is known for its complexity, with strict rules on benefits, termination, and long-term sick pay that can be challenging for new market entrants. We highlight the most important points below:

• Working with CAO: In the Netherlands, many employers must follow a Collective Labour Agreement (CAO), which sets sector-specific terms on wages, hours, leave, and pensions that can exceed statutory minimums. Non-compliance risks fines and disputes, so companies should confirm early if a CAO applies, integrate its terms into contracts and payroll, and monitor updates.
• Abide by work-life balance regulation: When setting up an entity in the Netherlands, companies should recognize that the Dutch emphasis on work-life balance is more than just a cultural preference – it is embedded in both workplace norms and employment law.
• Comprehensive Dutch Employee Protection Law: Dutch Employee Protection Laws are robust, particularly regarding unfair dismissal and discrimination. They are among the most comprehensive in Europe. Dutch law also strongly protects against discrimination based on various grounds, including gender, race, religion, and disability. 

An Employer of Record (EOR) simplifies this by acting as the legal employer on your behalf, managing payroll, taxes, and compliance while you direct the employee’s day-to-day work. In the Netherlands, Slasify streamlines this process by providing locally compliant contracts, handling statutory benefits like holiday allowance and social security, and enabling fast onboarding without the need to set up a BV. 

B. Tax Implications

In the Netherlands, businesses must navigate a well-defined but layered tax framework. Corporate income tax is levied at progressive rates, with a lower rate applying to profits up to a set threshold and a higher rate on amounts above it. Employers are also responsible for strict payroll tax compliance, which includes withholding income tax, social security contributions, and healthcare premiums on employee salaries. 

Additionally, most companies engaging in taxable goods or services must register for Value Added Tax (VAT) with the Dutch Tax and Customs Administration, charge the applicable VAT rate on sales, and submit periodic returns. Together, these obligations form a core part of maintaining legal and financial compliance in the Dutch market. 

C. Dutch Business Culture and Environment

The Dutch workplace culture values direct communication, efficiency, and a healthy work-life balance, with meetings often focused on clear agendas and consensus-driven decisions. While English is widely spoken in business settings – especially in multinational and tech sectors – knowledge of Dutch can be advantageous for building trust, navigating local regulations, and engaging with smaller domestic clients. 

Another interesting thing to note is that the majority of the business deals are done over coffee chats. The Netherlands is a rather small market, amplifying the importance of relationship building. A lot of business deals are done through referrals, so get ready for some personal chats and daily caffeine stimulus! 

Networking is also a key element of success, with relationships often fostered through industry events, professional associations, and informal gatherings that blend social interaction with business discussion.

V. Which Option is Right for You?

Expanding into the Netherlands offers multiple pathways for hiring and operations. The right choice hinges on factors such as market commitment, headcount, operational complexity, and the level of compliance control you want to maintain. 

Frequently Asked Questions and Answers

A. Why Select Dutch Business Setup?

A traditional Dutch entity, such as a BV, is the ideal choice for organizations with a long-term market commitment of five years or more, large team requirements exceeding 50 employees, and a need for a strong, localized brand presence. This model provides full operational control, enabling you to design internal processes, set benefit structures, and tailor HR policies to your exact needs. It is especially suited for complex business operations that require a permanent, scalable infrastructure and direct management of all legal and tax obligations.

B. Why Select an Employer of Record (EOR) Service?

Employer of Record (EOR) services are best for businesses seeking rapid market entry without the administrative burden of establishing a legal entity. This approach allows you to hire local talent quickly, test market viability, and manage small to medium-sized teams of 1–50 employees with minimal in-house HR involvement. It is also effective for project-based or temporary roles, enabling flexibility and cost control while ensuring compliance with Dutch employment laws.

C. Hybrid Approach Considerations

Many companies benefit from starting with an EOR to gain immediate market access, evaluate performance, and build brand awareness, then transitioning to a traditional entity once the business case for a long-term presence is clear. This hybrid path requires careful planning of timelines, knowledge transfer, and employee migration to minimize disruption. By aligning operational readiness with market opportunity, the hybrid approach offers both speed and sustainability in Dutch market expansion.

VI. Why Choose Slasify for Employer of Record in the Netherlands?

Expanding into the Netherlands involves critical decisions around speed, compliance, cost, and operational flexibility. Slasify stands out as a trusted partner by helping businesses navigate these factors with clarity and precision. Whether you need rapid market entry, risk-free hiring, or a bridge to a long-term local presence, Slasify’s Employer of Record (EOR) services are designed to fit your strategic needs.

Positioned as more than just a payroll provider, Slasify acts as a compliance guardian and market entry advisor. Our local expertise ensures Dutch employment contracts, payroll processes, and benefits meet all statutory requirements, while also offering guidance on market norms and cultural nuances to help your team integrate successfully. With a global footprint and dedicated client support, we help you focus on growing your business while we handle the complexities of local employment law.

Key features include:

• Fast onboarding (often within 48 hours to 2 weeks).
• Full payroll and tax compliance.
• Customized benefits packages.
• Flexible workforce management for both short-term and long-term hires. 

About Slasify

Founded in 2016 in Taiwan and now headquartered in Singapore, Slasify began with a vision. We saw the rapid expansion of businesses outpacing traditional work models. Inspired by the rise of the internet and the growing demand for flexibility, our founders created Slasify to bridge the gap between global businesses and remote talent. What started as a small team with a big dream has grown into a global powerhouse. Today, Slasify serves over 150 countries and operates in 130 currencies, empowering businesses to expand without borders. Read more!