The Netherlands: EOR or a Dutch entity

What does incorporating in the Netherlands actually involve?

Less than most companies fear, which is exactly why the setup cost is the wrong thing to decide on.

A Dutch private limited company, a BV, requires a minimum share capital of one cent. Not a nominal thousand, not a blocked deposit: one cent. A civil-law notary draws up the deed of incorporation containing the articles of association and the notary then arranges registration in the Business Register and the registration of ultimate beneficial owners. The Dutch government's business portal puts the notarial cost at roughly 500 to 1,500 euros depending on the notary.

So the barrier that dominates this decision in markets where incorporation is slow or capital-intensive barely exists here. In the Netherlands the entity is cheap to create and expensive to run, and the running weight is almost entirely employment law rather than corporate law.

The fourth step is the whole of the decision. The first three are administration.

What does a Dutch entity have to carry that a company usually underestimates?

Two years of sick pay, a dismissal system it cannot shortcut and a classification judgement it may not know it is making.

Sick pay is the heaviest obligation in Dutch employment. An employer must continue paying at least 70% of the last earned wage for up to 104 weeks and in the first year not less than the statutory minimum wage. Alongside that runs an active reintegration duty, a structured process of assessment, plan-making and review that the employer has to be able to evidence and a dismissal ban for the same two-year period. The obligation is not insurable away in the sense that matters here: whoever is the legal employer carries the process, the correspondence, the occupational-health relationship and the documentation, and the consequences of doing it poorly land at the end of the two years rather than at the start.

Dismissal has no at-will route. Economic grounds and long-term incapacity go to the UWV for approval; performance and conflict go to the subdistrict court. A dismissal made without the required approval can be annulled by the subdistrict court on the employee's application, which restores the employment, or the court can award the employee fair compensation instead. In practice a great many exits run instead through a written settlement agreement, which carries a statutory 14-day reconsideration right for the employee, or three weeks where the agreement fails to state it. On top of any of those routes, a transition payment of one third of a month's salary per year of service is due from the first day of the contract, including during probation, capped at 102,000 euros in 2026 or one year's salary where that is higher.

Classification against a collective agreement is a judgement, not a lookup. Around three quarters of Dutch employees are covered by an agreement, roughly 5.7 million under sector agreements and nearly 450,000 under company agreements. Where one applies it can set pay scales, sick-pay top-ups and pension well above the statutory floor and can shorten notice as well as lengthen it and it then becomes the binding source of terms. A new entity that classifies a role into the wrong agreement, or assumes none applies, has created a back-pay exposure that surfaces later.

If a company needs to invoice Dutch customers in its own name, hold Dutch licences or contract locally, an entity is not a cost comparison, it is a requirement. The permanent-establishment row is a caution rather than a differentiator: using an Employer of Record does not switch the question off, because a fixed place of business in the Netherlands, or a person there habitually concluding contracts for the company or playing the principal role in bringing them about, can create a permanent establishment whoever the formal employer is.

Can a company keep the person as a contractor instead?

Sometimes and the ground under that answer moved twice this year before settling.

Dutch enforcement against false self-employment resumed on 1 January 2025. The tax authority can impose correction obligations and additional assessments immediately, looking back no further than that date unless there was intent or disregarded guidance, in which case five years. From 1 January 2026 it can also impose culpability fines, though it has said it will not impose failure-to-file penalties during 2026.

The legislative picture settled this year and it settled against the contractor route. On 6 March 2026 the government dropped the part of the Vbar proposal intended to clarify the boundary between employment and self-employment, saying it had caused too much uncertainty and that it would bring forward a Self-Employed Act instead. What survived was the hourly-rate rule: the clarification part was struck from the bill by a nota van wijziging in March 2026 and the bill was retitled around what was left. It passed the lower house on 21 April 2026, with only FVD voting against, and the upper house on 16 June 2026. It is now the Wet van 18 juni 2026, published in Staatsblad 2026, 158 and it comes into force on 31 December 2026. At or below an hourly rate of 38 euros, the indexed value at its 1 January 2026 reference date, the worker asserts an employment presumption and the client has to prove there is no employment relationship.

The practical reading is that the contractor route in the Netherlands is now the highest-variance of the three options rather than the simplest. Its risk is live, its central rule has a commencement date in this calendar year and the exposure sits with the company engaging the work.

When does each route actually make sense?

On headcount, on permanence and on whether the company needs a Dutch presence for anything other than employing people.

There is one Netherlands-specific factor that does not appear in this comparison anywhere else in Europe and it should. Choosing the provider route means choosing a regulated counterparty. Today that means checking the provider is registered in the trade register as required by the Waadi, because the fine for getting it wrong reaches the hiring company as well as the provider. From 1 January 2028 it will mean checking the provider holds admission under the Wtta instead, with the public register available from 1 July 2027 and the same exposure on the hiring company. The trade-register duty is repealed on 1 January 2028 as well, so this is one check replacing another rather than two accumulating. Neither exists in the entity route, because there is no intermediary to check. That is a genuine argument on the entity side and it is fair to state it.

The counter-argument is that a company running its own Dutch entity has simply moved the compliance load rather than removed it and has taken on the two-year sick-pay process and the dismissal system in the bargain.

For the statutory detail behind the obligations described here, including working time, leave, the dismissal system and a dated 2026 cost reference table, see the complete guide to hiring employees in the Netherlands. For the market overview and the employer-cost structure, see Employer of Record in the Netherlands.