Employer of Record (EOR) Netherlands: Hire, Manage, and Pay Talent Seamlessly

Tarmack acts as your legal employer in the Netherlands—a trusted Dutch EOR and Global PEO that makes hiring, onboarding, payroll, and contractor management effortless, backed by solid expertise in Dutch labor laws, and with no need for you to set up an entity.

EOR Services in the Netherlands

Grow in the Netherlands without getting tangled in Dutch labor laws. Tarmack, as a Dutch EOR, handles hiring, payroll, and compliance as your legal employer, so you can scale confidently while we manage the heavy lifting.

Comprehensive EOR Netherlands Solutions for Seamless Global Hiring

1. Global Hiring and Onboarding

Hiring in the Netherlands comes with strict rules and ongoing changes to expat policies. Tarmack, as your Dutch employer of record, makes it simple:

Hire Dutch employees without opening a local entity
Onboarding aligned with Dutch work culture and regulations
Employment contracts that fully comply with the Dutch Civil Code
Guidance on the updated 30% ruling for expats

2. Payroll Management

Dutch payroll is detailed and tightly monitored — we keep everything accurate and compliant.

Monthly payroll processing in Euros
Mandatory tax and social security contributions are handled for you
Fully compliant with Belastingdienst requirements
Payslips, filings, and premium updates are built into the process

3. Compliance Assurance

Dutch regulations are stricter about worker protection and classification. As EOR Netherlands, Tarmack makes sure to comply with every rule.

Compliance with revised unemployment insurance premium rules
Protection against misclassification under tightened enforcement
Audit-ready records aligned with Dutch labor inspectorate standards
Support for IND rules affecting foreign talent and contractors

4. Benefits Administration

Dutch employees expect strong statutory and supplementary benefits — we manage everything end-to-end.

Mandatory health insurance and pension-related contributions
Holiday allowance (minimum 8%) and local perks like bicycle schemes
Seamless integration with payroll and HR systems
Support across all statutory leave types

Employer of Record Netherlands Pricing Structure

1. Employee Services

Employer of Record — from $199/employee/month
Full-time hiring without a local entity. Includes compliant payroll, contracts, benefits, HR/legal support, and IP protection.
Recruiting — from 10% of annual salary
Global talent search with shortlisting, interviews, optional background checks, and country-specific hiring guidance.
Payroll — from $15/employee per cycle
Payroll in 150+ countries, payslips, reimbursements, attendance, and compliant payment processing.
Enterprise — custom
For teams of 10+, with tailored pricing, global mobility support, and market advice.

2. Contractor Services

Contractor Recruiting — from 10% of annual salary
Fast global contractor hiring with AI-based matching, interviews, and optional background checks.
Contractor Management — from $39/contractor/month
Local contracts, compliant payouts, expense tracking, automated invoicing, and the option to convert to full-time later.

3. Corporate & Regulatory Services

Company Formation — contact for pricing
Incorporation and documentation support in 150+ countries, with optional payroll or immigration add-ons.
Immigration — from $999 per visa
End-to-end visa and work permit processing with compliance monitoring.
HR Software — from $2/employee/month
Lightweight global HR system for payroll, expenses, attendance, reporting, and ERP integrations.

Benefits of Employer of Record Netherlands

1. Accelerated Market Entry

Hiring in the Netherlands becomes instant with a Dutch Employer of Record. You skip setting up a Dutch private limited company (BV) and start onboarding through our local structure right away. Contracts, compliance, and paperwork are handled from day one.

2. Cost-Effective Hiring

With Tarmack as your Netherlands employer of record, you avoid incorporation costs, notary fees, and ongoing BV maintenance. You only pay for the people you hire and the services you choose.

3. Workforce Agility & Flexibility

Grow or adjust your team without getting stuck in Dutch labour rules. Tarmack, as a PEO Netherlands, supports permanent hires, fixed-term roles, and freelancers while keeping everything compliant and smooth.

4. Hassle-Free Compliance & Administration

We manage Dutch labour requirements—contracts, renewals, minimum wage, leave rules, documentation—so you stay protected and audit-ready.

5. Payroll & Benefits, Simplified

Tarmack, as a Dutch employer of record, runs monthly payroll in euros, handles all tax and social-security deductions, and processes mandatory benefits like the 8% holiday allowance, backed by clear HR and payroll reporting.

Employment Norms in Netherlands

The Netherlands (also known as Holland) is a country in northwest Europe that attracts top talent for its employee-friendly norms. Proximity to other business destinations across Europe makes it a great place for business expansion. The various employment norms in the Netherlands can be complex for new employers. EOR services help companies with employee payrolls, benefits, taxes and more, ensuring legal compliance.

General Information:

The currency of the Netherlands is Euro (EUR).
Amsterdam is the capital of the Netherlands.
Dutch is the official language of the Netherlands.
As of 2021, the of the Netherlands was reported to be USD 1.01 trillion.

Expand into the Netherlands with confidence — Tarmack, as your Dutch Employer of Record, handles hiring, payroll, and compliance end-to-end. Connect with us to get started.

Table of Contents

Select Section

Employment Contracts
Onboarding Process
Visa
Dutch Work Permits
Minimum Wages
Payroll Cycle
Annual Bonus
Health Benefits
Working Hours and Overtime
Leaves
Social Security Contributions
Personal Income Tax Rates
Payroll Compliance Overview
Top Skills on Demand
Probation
Termination
Severance Pay
Employees vs Contractors
Global PEO Netherlands
Start Hiring Today
Frequently Asked Questions

Employment Contracts Onboarding Process Visa Dutch Work Permits Minimum Wages Payroll Cycle Annual Bonus Health Benefits Working Hours and Overtime Leaves Social Security Contributions Personal Income Tax Rates Payroll Compliance Overview Top Skills on Demand Probation Termination Severance Pay Employees vs Contractors Global PEO Netherlands Start Hiring Today Frequently Asked Questions

Employment Contracts in Netherlands

An employment contract in the Netherlands is recognised under Article 7:610 BW when someone agrees to perform work personally, receives wages, and works under the employer’s authority. Dutch law focuses on the actual situation, not just the written label. Even a verbal agreement can be treated as employment if these elements exist.

How the Dutch Law Decides Whether It's Employment

An employment contract exists only if the following conditions are met:

1. Obligation to Work (Art. 7:610 BW): The employee must be committed to carrying out work for the employer in a real, ongoing sense.

2. Personal Performance (Art. 7:659 BW): The work has to be done by the employee themselves. Any “substitution clause” only matters if it can realistically be used with the employer’s consent.

3. Wages (Art. 7:610 BW): The employer must pay remuneration that meets minimum-wage rules. A simple reimbursement doesn’t qualify as wages.

4. Employer’s Authority (Art. 7:660 BW): The employer must have the ability to direct or intervene in the work. They don’t need to exercise this daily — the right to do so is enough.

When It Does Not Count as Employment

A relationship usually falls outside the employment definition when:

The worker operates as an independent contractor with their own clients
They decide their own working hours and duration
The activities are very minimal (e.g., below 8 hours a month)
No wages are paid such as volunteer work

In those cases, another type of contract typically applies.

Special Rules for Public Employers In the Netherlands

Government bodies may use employment contracts under Article 7:615 BW, or they may appoint someone as a civil servant. Civil-service appointments are unilateral and do not constitute employment contracts.

What Must Be Included in a Dutch Employment Contract

Employers must provide written terms within one month of the start date. These normally cover:

Names and addresses of both parties
Work location
Job role
Start date
Contract duration (for temporary work)
Working hours per week
Salary and payment schedule
Holiday allowance and vacation days
Notice periods
Probation (if agreed)
Pension details
Non-compete clause (if applicable)
CAO details, if the sector uses one

This aligns with the EU Directive on Transparent and Predictable Working Conditions, which ensures employees receive clear information about probation, working patterns, wages, and leave.

Types of Employment Contracts in the Netherlands

1. Permanent contract (indefinite duration)

A permanent contract has no end date and continues until either the employer or employee terminates it. It offers the strongest job security, dismissal protection, and benefits such as lower unemployment insurance premiums. Employers must follow strict legal grounds and procedures to end this type of contract.

2. Fixed‑term contract (temporary)

A fixed-term contract runs for a set period, such as six months or one year. It can be renewed, but after three successive contracts or three years, the employee is automatically entitled to a permanent contract. Temporary contracts are common for project work or seasonal employment, but must still comply with Dutch labour law.

3. On-Call / Zero-Hours Contract

The employee works only when called in and is paid only for actual hours worked. It offers flexibility but very little predictability.

Important upcoming change: Starting 1 January 2027, zero-hours contracts will be banned for most workers. They’ll be replaced by bandwidth contracts, where the employer guarantees a minimum number of hours and can request work only up to a defined maximum (capped at 130% of the minimum hours). Some exceptions will continue for minors and students.

Collectieve Arbeidsovereenkomst (CAO)

A CAO (Collectieve Arbeidsovereenkomst) is a ‘Collective Labour Agreement’ negotiated between employers or employer organisations and employees or trade unions. It sets practical terms such as pay, working hours, notice periods, and pensions. A CAO can never offer conditions below Dutch statutory requirements.

Where a CAO Applies

A CAO may cover an entire sector or just one company. It applies when your business has signed one, belongs to an employer association that is bound by one, or when the government declares it mandatory for your industry. Employers can also adopt a CAO voluntarily by mentioning it in contracts.

Types of CAO and Flexibility

A minimum CAO allows employers to offer better-than-listed conditions.
A standard CAO leaves no room for deviation—its terms must be followed exactly.

Effect of CAO on Employment Contracts

If a CAO applies, its terms take priority over conflicting clauses in individual contracts. When no CAO exists, employers rely on Dutch employment law and their own internal agreements like staff policies or individual contracts.

Simplify hiring in the Netherlands with Tarmack as your Employer of Record Netherlands. We handle all employment contracts compliantly, so you can focus on growing your team.

Onboarding Process in Netherlands

Employers looking to hire in the Netherlands need to have a well-planned onboarding process that is in line with the Dutch labour law. Employers must ensure that all legal, administrative, and workplace obligations are met before and during employment.

Step-by-Step Onboarding Checklist

1. Comply with recruitment rules: Advertisements for jobs should be neutral and inclusive. An employer should not inquire or ask in an interview about something that is legally sensitive, such as questions about the health, family, or private life of a candidate.

2. Verify employee identity: Check original identity documents (passport, ID card) and keep a copy in records. Driving licences are not valid proof.

3. Screen employees if needed: For integrity-sensitive roles, conduct background checks.

4. Follow GDPR rules: As per the General Data Protection Regulation (GDPR) rules, store and process employee data in compliance with European privacy law.

5. Keep personnel records: Collect essential info before the start date. Maintain payroll tax records, vouchers, and copies of identity documents.

6. Register as an employer: Dutch Tax Administration and the Chamber of Commerce (KVK) should be informed when you are hiring staff for the first time.

7. Draft an employment contract: Besides the salary, working hours, the trial period, holiday entitlement, holiday allowance, and whether a CAO applies or not, an employment contract should contain other terms that, according to the law, must be put into writing within a month of the employee starting.

8. Pay minimum wage and holiday allowance: Any employee working in the Netherlands has the right to be paid at least the Dutch minimum wage, and a holiday allowance must be given to them.

9. Comply with the Working Conditions Act<: As an employer, you have the obligation to provide your employees with a safe and healthy working environment, which is supported by a health and safety service provider.

10. Draw up a risk assessment (RI&E): Recognize the risks and preventive measures at the workplace. The Netherlands Labour Authority checks if the company is following the rules. Pay social insurance contributions: The employers are obliged to pay the employee and national insurance premiums to the Tax Administration.

11. Check Healthcare Insurance: Every employee should have Dutch healthcare insurance coverage. When an employee is not insured, the Dutch National Health Care Institute (CAK) will take care of the insurance and deduct the premiums.

12. Arrange a pension scheme: Participation in a sector pension fund is compulsory for a sector that specifies this. However, if a sector pension fund doesn't apply, an employer can decide to offer a pension or not.

Hiring Foreign Employees

Employers must first try to recruit within the EEA or Switzerland.
If hiring outside these regions, a work permit or a combined residence and work permit (Single Permit) is required.
Employers must arrange suitable accommodation for foreign staff who need a permit.

Hire confidently in the Netherlands with Tarmack, a leading EOR Netherlands partner. Our Employer of Record services cover onboarding, payroll, and compliance seamlessly.Contact us

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Visa in Netherlands

Work Visa:

Work permits are required to work in the Netherlands. Applicants must apply for and receive these permits from their home countries itself.
Work permits are required for all except those from the EU, EEA or Switzerland.
Residence permits are required for staying for more than 90 days.
A GVVA permit is required for applicants who need to stay for more than 3 months.
A TWV permit is required for applicants who need to stay for less than 3 months.

Business Visa:

A short-stay Netherlands Schengen visa is required for business visits. It is valid for up to 90 days. Some of the required documents are -

Accommodation proof
Proof of intention to return to home country
Proof of adequate finances
Invitation from the company that the applicant intends to visit
Clean criminal records
Medical insurance
Other requisite application documents

Dutch Work Permits – Key Guidance for Employers

Employers hiring non-EU/EEA/Swiss nationals in the Netherlands must secure a work permit (TWV) through UWV (Dutch public employment service) before the employee starts. This ensures compliance with Dutch labor law and avoids fines of up to €8,000 per illegal hire.

Reasons a Work Permit May Be Denied In the Netherlands

A permit will not be issued if any of these mandatory conditions apply:

A suitable unemployed candidate from the Netherlands, the EU/EEA, or Switzerland is available.
The vacancy was not registered with UWV WERKbedrijf for at least five weeks.
Recruitment efforts within the EU were insufficient.
A residence permit has not been requested or granted.
Offered employment conditions are below the standard for the role.
The Dutch minimum monthly wage for adults is not met.
Employment is not in the national interest.
Relevant sector quotas have already been reached.

Additional grounds may include:

Expected availability of suitable EU candidates in the near future.
The employee is under 18 years old.
No suitable accommodation is available.

Cases Where Dutch Permits Are Not Needed

Some employees can work in the Netherlands without a work permit, including highly skilled migrants, intra-company transferees with valid permits, and those whose residence permits already allow work. Short-term assignments are also allowed for foreign residents: up to 12 weeks in 36 weeks for installations/repairs, and up to 13 weeks in 52 weeks for business meetings.

Permit Duration and Residence Registration

Standard work permits are valid for one year; intra-company transfer permits can last up to three years. After five years, a residence permit endorsement allows work without a permit.
Employees staying longer than four months must register their address with the Population Registrar of their municipality; short-term employees register via RNI. Required documents include birth/marriage certificates and proof of housing.

Tarmack, your Dutch Employer of Record, manages employment work permits with local compliance, so you can hire in the Netherlands hassle-free. Reach out today!

Minimum Wages in Netherlands

From 1 July 2025, the statutory hourly gross minimum wage for employees aged 21 years and older is €14.40 per hour. For employees aged 20 and under, the Dutch youth minimum wage applies, with rates decreasing according to age. Here is the table with rates:

Below is how EOS is calculated when employment ends due to termination, contract maturity, or force majeure:

Age	Gross Minimum Hourly Wage
21 years and older	€14.40
20 years	€11.52
19 years	€8.64
18 years	€7.20
17 years	€5.69
16 years	€4.97
15 years	€4.32

The Netherlands updates these minimum wage amounts twice a year—on 1 January and 1 July—based on national wage trends and inflation.

Employer Responsibilities

Employers must ensure all employees aged 21 and above are paid at least the statutory minimum wage, and employees 20 and under receive the correct youth minimum wage.
When paying the minimum wage, employers must transfer it via bank. Cash payments are allowed only for amounts above the statutory minimum.
Failure to comply—whether underpaying or misclassifying employees—can result in fines and enforcement action from the Netherlands Labour Authority.

Tarmack, as your Employer of Record in the Netherlands, ensures all employees receive Dutch minimum wages. Stay compliant effortlessly—get in touch!

Payroll Cycle in Netherlands

The payroll cycle in the Netherlands is monthly. Employees are typically paid on the last day of the month.

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Annual Bonus in Netherlands

Employees in the Netherlands are paid 8% of their annual wage as an annual bonus. This 'holiday pay' or 'vakantiegeld' is offered in May or December. Employees who have worked for less than a year are offered 8% of the pay for the number of months worked.

Health Benefits in Netherlands

The Dutch standard healthcare insurance is mandatory for all employees.
A certain percentage of the employees' salaries is regularly contributed to the insurance.
The insurance covers -
- Consultation
- Treatment at a hospital
- Prescription medicines
- Maternity care
For additional care such as dental work, additional insurance must be taken. This is not mandatory.

Working Hours and Overtime in Netherlands

Work hours: Working hours are usually from 36 to 40 hours per week extending over 4 to 5 days per week.
Break: At least a 30-minute break is required for 5.5 hours of consecutive work.
Overtime: Employees cannot work for more than 60 hours per week. Overtime pay is decided in the collective agreements.

Leaves in Netherlands

Sick Leave

Employees are entitled to paid sick leave (70% of wage). The employer is required to pay for the sickness period which can be for a maximum of 104 weeks.

Parental Leave

Maternity leave: Up to 16 weeks of paid maternity leave can be taken. Enrolled employees must also apply to social security (Employment Insurance Agency) to avail of maternity benefits and allowance.
Paternity leave: The partner of the birth mother is entitled to a leave of 1 week that can be taken within a week of the birth of the child. Additional 4 weeks of paternity leave can be taken within 6 months after the birth of the child.

Annual Leaves

Employees in the Netherlands are entitled to 20 vacation days as annual leave.

Public Holidays (for the Calendar year 2024)

Some dates may vary based on official notifications and traditional calendars.

New Year's Day - 1st January
Good Friday - 29th March
Easter Sunday - 31st March
Easter Monday - 1st April
King's Day - 27th April
Liberation Day - 5th May
Ascension Day - 9th May
Whit Monday - 20th May
Christmas Day - 25th December
Boxing Day - 26th December

Public Holidays (for the Calendar year 2025)

Some dates may vary based on official notifications and traditional calendars.

New Year's Day - 1st January
Good Friday - 19th April
Easter Sunday - 20th April
Easter Monday - 21st April
King's Day - 27th April
Liberation Day - 5th May
Ascension Day - 29th May
Whit Monday - 9th June
Christmas Day - 25th December
Boxing Day - 26th December

Social Security Contributions in Netherlands

The Netherlands has a structured social security system made up of national insurance schemes (paid partly by employees) and employee insurance schemes (paid by employers). These contributions fund state pension (AOW), disability benefits, unemployment benefits, long-term care, and healthcare.

Both employers and employees have legally defined responsibilities, and contribution rates are updated annually. Below is a clear breakdown of the social-security components and accurate 2025 rates.

1. Employer Social Security Contributions

Employers in the Netherlands pay the bulk of employee insurance contributions. Below is the table:

Contribution Type	Description	2025 Rate
AWf – General Unemployment Fund (High rate)	For flexible/temporary contracts	7.74%
Aof – Disability Fund (small employer)	For sick leave and disability insurance	6.28%
Aof – Disability Fund (large employer)	Same purpose, rate depends on employer size	7.64%
Wko surcharge	Childcare allowance funding	0.50%
Whk – Return to Work Fund	Contribution varies by sector and company risk profile	Variable
Zvw – Health Insurance Contribution	Employer healthcare contribution	6.51%
Social Security Wage Ceiling	Contributions apply only up to this yearly income	€75,864 per year

2. Employee Social Security Contributions

As per Dutch law, the employers are responsible for deducting social security contributions from employee salaries and remitting them to the Dutch authorities. For 2025, the contribution base for national insurance schemes is capped at €38,441. Employers have to ensure these deductions are calculated each pay period to remain compliant with Dutch law.

Contribution Type	Description	2025 Rate
AOW – Old-Age Pension	Funds the state pension	17.90%
ANW – Survivor’s Benefit	Support for widows/widowers	0.10%
SWLZ – Long-Term Care	Covers long-term intensive care	9.65%

As your Employer of Record in the Netherlands, Tarmack handles employee social security contributions, keeping your payroll fully compliant. Connect with us today!

Personal Income Tax Rates in Netherlands

Under the Dutch tax system, income is divided into three boxes—salaries, business income, and investments—each taxed differently. Employers need to understand these distinctions to accurately withhold payroll taxes and ensure full compliance with Dutch regulations.

Box 1 (Work & Home Ownership)

This is the income from work and home ownership. This includes salary, benefits, and income related to the home you live in. For most employees, Box 1 is where their entire tax burden sits.

Income Range	Tax Rate
Up to €38,441	35.82% (includes national insurance)
From €38,441 to €76,817	37.48%
Over €76,817	49.50%

Key Point: Box 1 rates directly impact monthly payroll and net salary calculations.

Box 2 (Substantial Business Interest)

This applies if you own 5% or more of shares in a company. It covers dividends or profits you take out of that business.

Income Range	Tax Rate
Up to €67,804	24.5%
Over €67,804	31%/b>

Key Point: Business owners who pay themselves dividends fall under this box, not Box 1.

Box 3 (Savings & Investments)</b>

This includes savings, investment portfolios, second homes, and cryptocurrency. The tax is based on a deemed (not actual) return set by the government.

Tax‑free allowance: €57,684 (€115,368 for fiscal partners)
Tax rate: 36% on taxable income from assets above the allowance
Green investments exemption: €26,321 (€52,624 for partners) in 2025, but this exemption will be phased out by 2027.

Tarmack manages Dutch personal income tax requirements end-to-end as your Employer of Record Netherlands. Talk to us today!

Netherlands Payroll Compliance Overview

1. Government Requirements

When a company starts hiring in the Netherlands, a few legal and tax steps are non-negotiable. Here’s the stripped-down version of what you absolutely must handle.

A. Registration Requirements

Chamber of Commerce (KvK): Any business providing services, sales, manufacturing, or trading must register with the Dutch Chamber of Commerce. This registration automatically links you to the Dutch Tax Authorities.
Registration with the Dutch tax authorities as an employer: Employers must register as wage tax withholding agents. If you employ staff in the Netherlands, you must register with the Dutch Tax Authorities as a wage-tax withholding agent. Once registered, you’ll receive a Dutch wage tax number and are required to:
- Set up a Dutch payroll system.
- Withhold employee contributions of wage tax and national insurance (old age pension, survivors, long-term care) from salary, and remit them to the authorities.
- Pay employer contributions for employee insurance (unemployment, disability) and income-dependent healthcare contributions directly.
- Provide monthly payslips and annual statements to employees.
- Register with the tax authorities to obtain a Dutch wage tax number.
- Verify mandatory industry affiliation (affects certain social security contributions).
- File monthly electronic wage tax returns and remit payments on time.
International cases: If an employee is covered by another country’s social security system, confirmed by an A1 or Certificate of Coverage, only wage tax is due in the Netherlands.
Registration with the Dutch tax authorities as an employee: Employees must obtain a Burgerservicenummer (BSN) for tax and social security purposes.
- Residents: BSN issued by the local municipality.
- Non-residents: BSN issued at one of 19 designated RNI desks.

B. Ongoing Compliance

Wage Tax Returns: Employers must file electronically and pay within one month after each pay period. Late filings or payments result in automatic penalties.
Personal Income Tax (PIT) Returns:
- Tax year runs from 1 January to 31 December.
- The filing deadline is 1 May of the following year, with possible extensions.
- Filing is mandatory if the taxpayer receives an invitation from the Dutch tax authorities.

2. Pension Requirements

A. Registration Requirements

Dutch employers don’t automatically have to offer a pension plan—unless their industry falls under a mandatory sector pension fund or a collective labour agreement (CAO) that requires it. Even though it’s not legally compulsory in every sector, most employers still provide a pension scheme.

Employees usually contribute 33% to 50% of the total pension cost. This share is deducted directly through payroll every month.

B. Ongoing Compliance

Contribution rules differ by pension fund. The employer calculates and deducts the employee’s share in payroll, adds their own employer portion, and pays the total amount—typically via bank transfer. Payments can be monthly, quarterly, or yearly, depending on the fund’s rules.

3. Employment Obligations

Dutch employers must follow several core rules when hiring and managing staff. These obligations come from Dutch employment law and, in many cases, the applicable collective labour agreement (CAO).

A. Employment Contracts: Every employee should receive a contract that fully aligns with Dutch employment law and any CAO rules. The contract must also reflect statutory pay, leave, and benefit requirements.

B. Minimum Wage: Employers must pay at least the statutory minimum wage (updated twice a year). As of July 2025, the hourly minimum wage is €14.40 for workers aged 21 and older. Along with base pay, there's a mandatory 8% holiday allowance that must be included in the employment terms.

C. Holiday Leave & Illness: Employees get at least four times their weekly working days as paid annual leave. For sickness:

Employers must continue paying 70% of salary during the first two years of illness (never less than minimum wage in year one).
Many CAOs require higher sick-pay percentages—often 80% to 100%.

A works council becomes mandatory once a company reaches 50 employees.

D. Compensation & Benefits: Within legal and CAO limits, employers can design their own compensation and benefits packages. Reviewing contracts, pension plans, and market benchmarks is common to stay competitive. Annual merit increases and inflation adjustments are widely practiced.

Full-time employees (40 hours/week) are legally entitled to at least 20 vacation days, though most employers offer 25–30 days. The country typically observes 6–8 public holidays, depending on the calendar.

E. Extraterritorial Costs and the 30% Facility: When employees are hired from abroad, they often face extra living expenses such as temporary housing, residence permits, travel home, or language courses. Dutch employers can compensate for these costs either by reimbursing the real expenses or by using the 30% facility.

Reimbursement of the Actual Costs: Employers may repay the employee’s actual, proven extraterritorial expenses tax-free. This includes documented costs like double housing, home leave, language training, and permit fees. As long as the employee can substantiate the expenses, the employer can reimburse them without tax.
30% Facility: Instead of reimbursing actual costs, employers can choose the 30% ruling, which allows them to pay a tax-free allowance of up to 30% of the employee’s taxable salary. To qualify, the employee must:
- Have lived more than 150 km outside the Dutch border for at least two-thirds of the 24 months before employment.
- Meet the minimum taxable salary requirement (excluding the 30%):
  - €46,660 for most employees
  - €35,468 for employees under 30 with a master’s degree
- The facility can be granted for up to five years, and a joint employer–employee application must be filed within four months of starting work.
Recent Updates (2025):
- The 30% rate remains fully 30% for the entire duration (phasing-down is cancelled).
- The allowance applies only up to a salary cap of €246,000.
- The partial non-resident tax status is abolished from 1 January 2025, except for employees protected under the transition rules.

F. Immigration: EEA and Swiss nationals can work in the Netherlands without immigration formalities. For non-EEA and non-Swiss employees, you must determine whether they need a residence permit, work permit (TWV), or a combined single permit (GVVA) before starting employment.

G. Social Security: Employees are normally insured for social security in the country where they physically perform their work. This applies even for short-term assignments.

EEA and Switzerland: EU social security regulations decide where employees are insured when they live in one EEA country and work in another. The basic rule: coverage applies in the country where work is performed. Exceptions exist, such as:
- Temporary posting to another EEA country
- Working in two countries
- Working partly in the country of residence
When an exception applies, employers should request an A1 Certificate from the employee’s home-country authority. Holding an A1 means Dutch social security contributions do not apply; contributions are paid in the country that issued the certificate.
Social Security Treaty: If the Netherlands has a social security treaty with the employee’s home country, the treaty determines which country’s system applies. Employers should always check the relevant treaty to know where contributions are due.

H. Foreign-Company Pension:

If an employee is assigned to the Netherlands but stays enrolled in a foreign (home-country) pension plan, the Dutch tax authorities generally treat employer contributions as taxable income, and the employee’s contributions are not deductible.
However, if the employer and employee secure an approval from the Dutch tax authorities to treat the foreign pension scheme as “qualifying,” then employee contributions become deductible, and employer contributions are no longer considered taxable income.

I. Healthcare: Everyone living in the Netherlands must take Dutch health insurance, except in two clear cases:

Employees from EEA countries or Switzerland
- If they have an A1 statement, they don’t need Dutch insurance. They stay insured in their home country.
- If they’re only in the Netherlands briefly, they can use their European Health Insurance Card (EHIC) for emergency care.
- If they actually move to the Netherlands, they must get an S1 statement from their home country.
- The S1 must be registered with the Dutch insurer CZ, so healthcare costs in the Netherlands are billed back to the home-country insurer.
Employees from non-EEA / non-Swiss countries
- If they hold a Certificate of Coverage, they also don’t need Dutch health insurance and simply keep their home-country healthcare cover.

4. Payroll Requirements

Payroll in the Netherlands must be processed monthly or every four weeks, with a payslip each period.

Work-related cost scheme (WRCS): Under the WRCS, employers can give tax-free allowances within a fixed “free space.” For 2025, the free space is:

2% on the first €400,000 of the fiscal wage bill
1.18% on anything above that

If total benefits exceed this limit, the employer pays an 80% final levy on the excess.

Some benefits don’t count toward the free space, such as specific exemptions (e.g., course fees, public transport up to €0.23/km, temporary accommodation, small home-office allowances).

Other items have zero valuation — like workplace coffee, water, or a company bike — so they don’t reduce the budget.

All benefits must pass the customary-use test, meaning they can’t differ more than 30% from what’s considered normal or standard.

Reporting Obligations: Employers must calculate the WRCS final levy once a year. If the tax-free space is exceeded, the 80% final levy must be reported and paid in the first wage tax return of the following year.

To apply exemptions or free-space benefits correctly, employers must explicitly designate these items as work-related costs in their administration. Without this designation, the Dutch tax authorities won’t accept the exemption.
A proper system is needed to track all allowances and benefits, especially anything not processed through the payslip, to show they were clearly marked as work-related costs.

5. Banking Requirements Related to Payroll

Net salary must be paid in local currency, but employers can use either a Dutch or a foreign bank account to make the transfer.

Liabilities to Dutch Authorities:

Taxes and social-security contributions can also be paid from a Dutch or overseas account. If paying from abroad, the employer must cover all bank charges and exchange-rate differences. Any shortfall is treated as an underpayment and can trigger interest charges from the Dutch authorities.

Tarmack, as your EOR Netherlands, manages Dutch payroll compliance seamlessly. We ensure each pay cycle is accurate and aligned with Dutch rules. Get in touch!

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Top Skills on Demand in Netherlands

Tarmack,‍‌‍‍‌‍‌‍‍‌ as a Netherlands employer of record, always monitors talent trends in the Dutch market very closely. The below-mentioned priorities mirror the positions for which companies are hiring most actively in the Netherlands:

1. Technology‍‌‍‍‌‍‌‍‍‌ & IT: Dutch firms are rapidly automating and digitally transforming their operations, and the tech & IT jobs are the ones that form the core of that radical change.

In-demand skills include:

Artificial Intelligence (AI) & Machine Learning (ML): Professionals who can build predictive models and implement ML solutions to drive innovation are in high demand across Dutch industries.
Data Science & Analytics: Experts in big data, Python, and data visualization help companies turn data into strategic insights, a key requirement in the Netherlands’ data-driven market.
Cloud Computing & DevOps: Skilled talent in AWS, Azure, and DevOps practices is essential as Dutch firms accelerate cloud adoption and digital transformation.
Cybersecurity: Specialists in network security and incident response are crucial for protecting growing digital infrastructures in Dutch businesses.
Software & Web Development: Developers proficient in Java, Python, and JavaScript are sought after to create robust applications supporting innovation and growth.

2. Healthcare: Hospitals and care institutions compete for qualified nurses, medical technicians, and other care professionals due to shortfalls and employers will have to prepare for a hiring competition that will be difficult.

3. Engineering & Logistics: Civil, mechanical, and electrical engineers are the mainstay who have been consistently required for infrastructural and industrial projects. While logistic planners and supply-chain managers support the Netherlands’ trade hubs.

4. Business & Finance: Some of the positions that have been more and more significant, i.e., they have become a major concern, especially for international employers operating within Dutch and EU frameworks, include those in accounting, internal control, risk management, and regulatory ‍‌‍‍‌‍‌‍‍‌compliance.

Strengthen your Dutch hiring strategy with Tarmack—your Employer of Record Netherlands for sourcing high-demand talent. Contact us!

Probation in Netherlands

The probation period in the Netherlands can be for up to 2 months. Probation periods are usually decided upon in collective agreements.

Termination in Netherlands

In the Netherlands, the Employment Insurance Agency (UWV) protects employees from termination due to economic conditions or long-term disability.
Termination terms are set in the employment agreements and collective agreements.
The mandatory notice period in the Netherlands is one month. It differs according to the length of service -
- Up to 5 years - 1 month
- 5 to 10 years - 2 months
- 10 to 15 years - 3 months
- More than 15 years - 4 months

Severance Pay in Netherlands

The severance pay or the transition payment is decided upon in the employee agreements.

Employees vs Independent Contractors in Netherlands

Employees: Employees are individuals working under the authority and supervision of an employer. They are part of the company’s workforce and entitled to protections under Dutch labour law.

Work must be performed personally, not delegated.
Receive wages, benefits such as holiday pay, sick leave, and pension contributions.
Employers are responsible for withholding wage tax and social security contributions.
Covered by collective labour agreements where applicable.
An employment relationship exists by law, even if not formally documented.

Independent Contractors (ZZP/Freelancers): Independent contractors are self-employed professionals who provide services on assignment, without being bound by an employment contract.

Operate through a sole proprietorship or limited company (BV).
Free to choose clients, set fees, and manage workload.
Responsible for their own taxes, pension, insurance, and business risks.
No entitlement to employee benefits such as paid holidays or sick leave.
Flexibility and independence are advantages, but income gaps and compliance obligations are risks.

Compliance & Misclassification:

From 1 January 2025, Dutch authorities will enforce misclassification rules more strictly.
Presumption of employment applies if the hourly rate is below €32.24 (VBAR law effective July 2025).
Misclassification can trigger immediate tax corrections and, from 2026, financial penalties.
Long assignments with one client or strong employer control increase the risk of being treated as employment.

Global PEO Netherlands

An Employer of Record (EOR), also known as a Global PEO, allows you to hire employees and contractors in the Netherlands without opening a local entity.

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Tarmack, as your PEO Netherlands, offers transparent, competitive pricing with no hidden fees. Our cost-effective plans help you manage your Dutch workforce smoothly and stay within budget. Reach out to us today to get started.

Frequently Asked Questions

What is an Employer of Record (EOR) in the Netherlands?

An EOR is a local partner that becomes the legal employer for your staff in the Netherlands while you manage their day-to-day work. It lets you hire, onboard, and pay talent compliantly without opening a Dutch entity.

What is the cost of an Employer of Record in the Netherlands?

The prices for Tarmack EOR Netherlands services are clear and easy to plan for. It’s $199 per employee each month and $39 per contractor each month. If you only need payroll support, it starts at $15 per employee per cycle. For further breakdowns, contact us.