Hiring a Contractor in the Netherlands: What You Need to Know

If you need to engage new talent in the Netherlands, you have two choices: hire an employee, or opt for an independent contractor or freelancer.

If your business is not based in the Netherlands, the first option is often prohibitively expensive because it usually involves setting up a legal entity in the country — which can be both costly and time-consuming. Once your entity is established, you’ll also be responsible for payroll taxes, employee benefits, and other additional costs.

Hiring a Contractor In The Netherlands - CXC Global

On the other hand, if you take on an independent contractor, they’ll be responsible for declaring and paying their own taxes and social charges, and you won’t need to provide the extra benefits you’d be required to grant to an employee.

You’ll also get access to a pool of skilled and experienced professionals who simply aren’t available on the traditional job market. Because you can start and stop your agreement with an independent contractor at any time, you’ll benefit from a flexible workforce that can expand and contract according to your needs.

But there are still a few challenges involved with engaging contractors in the Netherlands. In this article, we’ll take you through the process of hiring a contractor in the Netherlands, and provide information on some of the compliance challenges you might face. 

Table of Contents

  • About independent contractors in the Netherlands
  • 4 reasons to hire contractors in the Netherlands
  • How to hire a contractor in the Netherlands: 5 steps to take to ensure compliance
  • Problems to be aware of when hiring contractors in the Netherlands
  • What if you need an employee?

About independent contractors in the Netherlands

Freelancers or self-employed people in the Netherlands are called zelfstandige zonder personeel, or zzp’ers. They might work under a sole proprietorship (‘eenmanszaak’) or a limited company (‘besloten vennootschap’ or ‘bv’), and are responsible for paying their own taxes and health insurance premiums. They must also register with the Dutch Tax and Customs Administration, and charge VAT on their invoices.

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3 reasons to hire contractors in the Netherlands

If you’re looking for independent talent in Europe, the Netherlands is an excellent place to look. Here are three reasons why: 

1. A growing hub for tech talent

The Netherlands reportedly ranks second in the world for internet connectivity, and its capital, Amsterdam, has been named one of the world’s most ‘AI-ready’ cities. Ventures such as the Amsterdam Science Park have been set up with the aim of making Amsterdam the next big European tech centre. 

And according to Atomico’s State of European Tech 2021 report, the Netherlands is emerging as a top hub for tech companies, with Amsterdam ranking 5th in their list of the top 20 European tech hubs by capital invested.

This means that Amsterdam — and the Netherlands more broadly — is a great place to look for your next tech hire, whether that’s a permanent employee or an independent contractor.

2. High levels of education

The Netherlands also has a highly educated workforce. The country scores above the European average for tertiary (university level) education, with over a third of 25–64 year-olds holding a university degree.

If you’re looking for educated and highly skilled independent contractors in Europe, the Netherlands is a good place to start. 

3. High English proficiency

One of the most significant advantages of working with Dutch independent workers is that you probably speak the same language. The Netherlands consistently takes the number one spot for English as a second language (ESL) proficiency in Europe. 

According to some estimates, around 90% of the Dutch population speaks English. This means that you won’t need to grapple with language barriers when communicating with your contingent workforce. 

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How to hire a contractor in the Netherlands: 5 steps to take to ensure compliance

Like any country, the Netherlands has certain compliance requirements when it comes to hiring independent contractors and freelancers. Here are the steps to take to make sure your contractor relationships are legal and compliant: 

1. Verify the identity of the contractor

In the Netherlands, employers are legally required to verify the identity of their workers — including zzp’ers. Before hiring an independent worker, you’ll need to see an original identity document such as a passport and check the worker’s name, age, height, nationality, signature and photo. You should also file a copy of their ID document for your records. 

There are strict rules on which documents count as official ID and exactly how you should verify the worker’s identity, which you should be aware of before taking on a worker in the Netherlands.

If you are considering hiring contractors in the Netherlands, you should learn more about a new work from home law in the Netherlands. Explore what this new law will mean for employers in the Netherlands, including the circumstances in which they’ll be able to refuse a WFH request, and the benefits that the new legislation could bring to Dutch businesses.

2. Make sure it’s a true self-employment arrangement

When you engage an independent contractor or freelancer, you need to be sure that there’s no employment relationship between you in the eyes of the law and the local tax authority. If there is an employment relationship, you’ll be required to pay payroll taxes and provide other benefits that you don’t need to grant a zzp’er. 

The Dutch government has created a tool (in Dutch) to help contractors and their clients assess their relationship and determine whether it looks like employment or a true self-employment arrangement.

3. Sign a model agreement with your contractor

Dutch contractors and their clients can use a ‘model agreement’ to help ensure their business relationship is not seen as employment. These are standard contracts drawn up by the Dutch Tax and Customs Administration for independent workers and their clients. 

There are three types of model agreement available: 

  • Individual model agreements: These have been created by members of specific professions or industries, and can be used by anyone in the same profession. 

If you don’t want to use one of the model agreements available, you and your contractor can draw one up yourself and have it assessed by the Dutch Tax and Customs Administration.

4. Provide safe working conditions

Employers in the Netherlands must provide a safe and healthy workplace for their workers, including freelancers and self-employed people. This is particularly important if your contractors work in your office or another location owned by your business.  

5. Determine the worker’s working hours and rest times if necessary

Employers in the Netherlands must provide a safe and healthy workplace for their workers, including freelancers and self-employed people. This is particularly important if your contractors work in your office or another location owned by your business.  

While rules about working hours and rest times are clearly set out by law in the Netherlands, they don’t normally apply to freelancers and self-employed people, who typically set their own schedules.

However, the rules do apply to independent workers when the safety of third parties is at stake. One example is the transport sector, where drivers and other contractors may have to abide by the rules to protect others. It’s important to ensure you understand the relevant laws and whether they apply when you begin a relationship with a contractor.

Problems to be aware of when hiring contractors in the Netherlands

If you’re a foreign company thinking of hiring independent contractors in the Netherlands, there are a few potential pitfalls that you need to be aware of. 

Employee misclassification

Employee misclassification is when a worker is classed as an independent contractor when their working relationship suggests that they are actually an employee. When an employer classes an employee as a contractor — either deliberately or not — they could have to pay taxes covering the whole period the worker has been employed, and even face fines and penalties. 

It’s important to verify that any relationship with a contractor in the Netherlands (or anywhere) is actually a contractor–client relationship in the eyes of the local tax authorities.

Misclassification

Permanent establishment risk

Companies hiring remote contractors in the Netherlands when their business is based elsewhere should also be aware of permanent establishment risk. A company can be deemed to have a ‘permanent establishment’ in a country when it conducts significant activities there. This means that the company could be held liable for local corporate taxes, even if they don’t have a legal entity in the country. 

Permanent establishment typically isn’t triggered unless the company’s activity in the country is revenue-generating. This means that employing independent contractors to perform work such as IT support, marketing, or HR isn’t likely to trigger permanent establishment. However, hiring contractors for roles that involve closing contracts on behalf of the company — such as sales roles — could put you at risk. 

It’s always a good idea to consult with a tax expert before taking on workers in any country where you don’t have a legal entity to ensure you won’t trigger permanent establishment and have to pay taxes.

What if you need an employee?

If you need more extensive or long-term help from a worker in the Netherlands or need to have more control over how they work, you might need to hire an employee instead of engaging a contractor. 

While the traditional way to hire employees abroad is to set up a legal entity in the country in question, this can be expensive and time-consuming. Thankfully, there is another way: engaging them through an employer of record (EOR)

These companies specialise in hiring employees on behalf of companies and usually manage HR tasks like payroll, benefits and onboarding. By working with an EOR in the Netherlands, you can avoid the hassle of setting up a branch or subsidiary, while ensuring that you’re operating on the right side of employment and tax law.

Compliantly hire contractors and remote employees in 65+ countries

At CXC, we specialise in helping ambitious businesses to hire remote contractors and employees around the world. We operate through a vast network of legal entities and can help you to compliantly and legally hire in over 65 countries — including the Netherlands.

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