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Our workforce compliance guide to the Netherlands covers everything you need to compliantly hire, onboard, manage and pay independent contractors and employees in the Netherlands.
Worksuite offers a whole range of professional services and compliance tools, making it easy to compliantly engage independent contractors as well as full-time workers in the Netherlands—all without needing to set up your business entity.
Businesses hiring in the Netherlands should understand the important legal distinction between independent contractors and employees. If an independent contractor is found to be an employee, the employee becomes protected by Dutch employment law. In turn, the employer then becomes responsible for withholding income tax and national insurance contributions. That’s why it’s critical to work with a partner like Worksuite to establish a compliant legal hiring framework.
There are three distinct legal statuses that govern the relationship between a hiring organization and its employees or independent contractors. A standard employment agreement indicates the traditional relationship between an employer and an employee. A contract of work indicates a one-time freelance engagement whereby an independent party agrees to provide a defined piece of work for a set amount of money. A contract for services is the agreement under which independent contractors operate with a principal (the organization paying the contractor). A contract for services is used for long-term engagements with independent contractors.
New case law continues to emerge as the Netherlands attempts to define strict parameters for the definition of independent contractors. Dutch labor laws are also in a constant state of revision and policy changes, and Worksuite can help employers automatically navigate rapid changes in employment compliance.
Governed by Dutch law and the Dutch Civil Code, employee contracts can either have indefinite terms, fixed terms, or temporary (agency) terms.
Contractual agreements must be compliant with Dutch law.
After completing the interview process, employers make a formal written job offer to their chosen employee. This job offer (or contract, if the employer wishes to issue it at this stage) details the salary and responsibilities, as well as the employment term.
The client and the independent contractor must both agree to and sign a contract for services. Both parties must take all possible steps to ensure this agreement does not amount to disguised, or false, employment.
Contractors can be hired in three different ways:
Employers must withhold and pay all appropriate payroll taxes and income contributions (commonly known as social premiums).
Independent contractors must register with the Dutch Tax and Customs Administration (Belastingdienst). Each year, a contractor must report and pay both VAT and income tax.
| Employers must make all necessary income tax, social security, and healthcare deductions at source.
Employers must report and pay payroll taxes, including:
The Belastingdienst provides an online guide to calculating payroll taxes. Employees must file an income tax return with the Belastingdienst. |
No deductions should be taken from payments made to independent contractors
Independent contractors must file an income tax return with the Belastingdienst.
Most employees are paid a monthly or annual salary rather than an hourly rate. Many employers also pay a so-called 13th month as an end-of-year bonus
A typical independent contractor in the Netherlands issues a monthly invoice for the work completed.
Employees must be paid the Dutch minimum wage. Employers must adhere to statutory notice periods when terminating an employee’s contract. And every employee can expect equal treatment and compliance with health, safety and working hours legislation.
Employees in the Netherlands also enjoy unemployment benefits and unfair dismissal protection, as well as 16 weeks of maternity leave at full pay, 30-minute rest periods after five hours and 30 minutes of work, and protection against discrimination.
Employers are able to terminate agreements with independent contractors in line with their agreed contracts. Typically, this will involve giving the contractors an agreed notice period.
Independent contractors must receive at least the minimum wage, as well as working conditions that comply with equality, health, safety, and working hours legislation.
Independent contractors in the Netherlands are not entitled to holiday pay, sick pay, pension contributions, unemployment benefits, or leave entitlement.
Sick pay (70% salary for two years), holiday pay, leave entitlement, and a holiday allowance (usually 8% of annual base salary, paid each May) are all standard in Dutch employment contracts.
An employer must also contribute to the employee’s pension scheme.
Contractors’ benefits are governed by the content of the contract agreed upon between themselves and their principal.
Almost all employees in the Netherlands are paid monthly on the last day of each month.
The standard payment term for a Dutch invoice is 30 days. It is illegal for large companies to enforce payment terms of more than 60 days into contracts with SMEs.
Invoices in the Netherlands must include a VAT ID number, VAT amount, date, the name and address of both the supplier and the customer, the KVK-nummer (Dutch Business Registration number), details about what was supplied, including the quantity and the date of supply.
All invoices must be sent by the 15th day of the month after the month in which the service was supplied.
Governed by Dutch law and the Dutch Civil Code, employee contracts can either have indefinite terms, fixed terms, or temporary (agency) terms.
After completing the interview process, employers make a formal written job offer to their chosen employee. This job offer (or contract, if the employer wishes to issue it at this stage) details the salary and responsibilities, as well as the employment term.
Employers must withhold and pay all appropriate payroll taxes and income contributions (commonly known as social premiums).
| Employers must make all necessary income tax, social security, and healthcare deductions at source.
Employers must report and pay payroll taxes, including:
The Belastingdienst provides an online guide to calculating payroll taxes. Employees must file an income tax return with the Belastingdienst. |
Most employees are paid a monthly or annual salary rather than an hourly rate. Many employers also pay a so-called 13th month as an end-of-year bonus
Employees must be paid the Dutch minimum wage. Employers must adhere to statutory notice periods when terminating an employee’s contract. And every employee can expect equal treatment and compliance with health, safety and working hours legislation.
Employees in the Netherlands also enjoy unemployment benefits and unfair dismissal protection, as well as 16 weeks of maternity leave at full pay, 30-minute rest periods after five hours and 30 minutes of work, and protection against discrimination.
Sick pay (70% salary for two years), holiday pay, leave entitlement, and a holiday allowance (usually 8% of annual base salary, paid each May) are all standard in Dutch employment contracts.
An employer must also contribute to the employee’s pension scheme.
Almost all employees in the Netherlands are paid monthly on the last day of each month.
Contractual agreements must be compliant with Dutch law.
The client and the independent contractor must both agree to and sign a contract for services. Both parties must take all possible steps to ensure this agreement does not amount to disguised, or false, employment.
Contractors can be hired in three different ways:
Independent contractors must register with the Dutch Tax and Customs Administration (Belastingdienst). Each year, a contractor must report and pay both VAT and income tax.
No deductions should be taken from payments made to independent contractors
Independent contractors must file an income tax return with the Belastingdienst.
A typical independent contractor in the Netherlands issues a monthly invoice for the work completed.
Employers are able to terminate agreements with independent contractors in line with their agreed contracts. Typically, this will involve giving the contractors an agreed notice period.
Independent contractors must receive at least the minimum wage, as well as working conditions that comply with equality, health, safety, and working hours legislation.
Independent contractors in the Netherlands are not entitled to holiday pay, sick pay, pension contributions, unemployment benefits, or leave entitlement.
Contractors’ benefits are governed by the content of the contract agreed upon between themselves and their principal.
The standard payment term for a Dutch invoice is 30 days. It is illegal for large companies to enforce payment terms of more than 60 days into contracts with SMEs.
Invoices in the Netherlands must include a VAT ID number, VAT amount, date, the name and address of both the supplier and the customer, the KVK-nummer (Dutch Business Registration number), details about what was supplied, including the quantity and the date of supply.
All invoices must be sent by the 15th day of the month after the month in which the service was supplied.
Businesses looking to work with independent contractors in the Netherlands should remember one simple rule that determines the classification of a worker as an employee or contractor: substance over form.
It is not enough, for example, to simply assume that your worker is correctly identified as an independent contractor because you have agreed and signed a contract for services. The relationship must also follow the guidelines set in Dutch law relating to the relationship between a principal and a contractor.
Any attempt by Dutch authorities to examine and potentially reclassify a contractor as an employee will be based on the following factors:
In the Netherlands, it is important that both independent contractors and their principals work together to understand if their agreement constitutes that of an employee-employer relationship. If it does, but the worker is incorrectly classified as an independent contractor (commonly known as false self-employment), then the employer could become liable for payroll and social security deductions that would normally be taken from a standard employee’s payslip.
Both the principal and the contractor share responsibility for correctly determining the nature of the relationship between the two parties. Classifying a worker as an independent contractor prevents them from claiming certain benefits that are available to employees as standard.
In addition to the nine factors outlined previously, Dutch courts apply another test to determine whether a worker is an employee or a contractor. If, over a period of three months, the worker completes either 20 hours of work per month or completes work every week for the same business, they are likely to be deemed an employee. This situation can arise when no formal contract exists or when the actual workings of the relationship differ from the original contract’s parameters.
A contractor in the Netherlands is commonly known as a zzp’er (zelfstandige zonder personeel). They usually operate either as a sole trader or a company. Ensuring the classification of a worker is correct is even more important after the January 2021 introduction of the Balanced Employment Market Act (WAB). The Dutch government now provides an online tool (Webmodule Beoordeling Arbeidsrelatie) to help employers and principals classify workers correctly.
Businesses engaging the services of independent contractors in the Netherlands must ensure they do not make any deductions from the contractor’s pay. Standard employee deductions, such as income tax, social security contributions, and healthcare deductions, do not apply when dealing with independent contractors.
Instead, independent contractors in the Netherlands are responsible for their own tax calculations and payments. Each year, they must file annual tax returns detailing their turnover, profits, and expenses. The tax return must be completed and filed with the Dutch Tax and Customs Administration before 1 May. Legitimate contractors will be expected to pay both VAT on their turnover and income tax, or inkomstenbelasting, on their profit.
An independent contractor in the Netherlands has many legitimate ways of reducing their profit and, therefore, their income tax bill. One such scheme is the entrepreneur allowance (ondernemersaftrek), which consists of six different tax reliefs and allowances. It is deducted from a contractor’s profit to minimize their tax liabilities.
Businesses working with independent contractors in the Netherlands should seek professional advice and guidance to ensure they are classifying the worker correctly and not exposing the business to punitive costs at a later date for creating a situation of false self-employment. Working with a partner like Worksuite is a major step towards ensuring ongoing compliance with all relevant Dutch legislation.
We can simplify hiring full-time workers in the Netherlands by acting as the Employer of Record (EOR) on your behalf, handling everything from contracts, onboarding, documentation, payroll, benefits, and workforce management. Reduce your time-to-hire by 90%, slash your overheads, and remain fully compliant.
