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Employer of record or your own Dutch entity: which do you need?
An employer of record is another company that legally employs your staff while you direct their work. Your own Dutch entity makes you the employer. The rules that follow the employer, not the worker, are the ones that decide: research credits, sponsorship of staff from outside the EU, and what a share register looks like to an investor.
Founders landing in the Netherlands meet this fork early, usually when the first hire is close and the entity is not ready. An employer of record, often shortened to EOR and close to what Dutch rules call payrolling, is a company that formally employs someone on your behalf. Your own entity means a Dutch company, normally a BV, that employs the person itself.
This page compares the two on what the Dutch rules actually attach to. It does not say which is better, because that depends on how long you plan to stay, whether you will claim research credits, and where your engineers sit. No providers are named here.
| Criterion | Employer of record | Your own Dutch entity |
|---|---|---|
| Legal employer | The other company. You recruit, set the salary and supervise the work | Your Dutch company |
| Speed to a first hire | Usually the faster of the two, since no company has to be formed first | Slower, because the entity, the tax registrations and a bank account come first |
| Payroll tax registration | Done by the other company under its own payroll taxes number | Your own registration as an employer, and your own payroll taxes number |
| Terms of employment | Payroll staff are entitled to at least the same terms as your own comparable staff | Set by you, within Dutch employment law |
| WBSO research credit | Not available to you for those people: they are not on your payroll | Available for staff on your own payroll, if the other conditions are met |
| Sponsoring staff from outside the EU | The other company would have to be the recognised sponsor for its own employees | You can apply for recognised sponsor status yourself |
| Corporate income tax | Depends on whether your own activity here amounts to a permanent establishment | Your Dutch company files its own return |
| What an investor sees | A service contract, and staff who are not employed by the company being funded | Contracts, staff and intellectual property inside the company being funded |
What an employer of record actually is
Dutch rules describe the arrangement plainly. In payrolling you recruit the employees yourself, set their salary and fully supervise their work, while the payroll company formally hires and employs them. That company handles the employment contracts, the salary administration, the pension and the annual income statements, and it pays the payroll taxes and social insurance contributions.
Two duties land on the hirer. You have to tell the payroll company the terms of employment that apply before the person starts. And payroll employees are entitled to at least the same terms of employment as your own staff on a fixed-term or permanent contract, which means the arrangement is not a way to run a cheaper second tier of staff.
Source: Business.gov.nl, Payrolling
What your own entity gives you
It makes you the withholding agent. A company with a permanent establishment in the Netherlands withholds payroll taxes for the people working here, registers as an employer with the Netherlands Tax Administration, and receives a payroll taxes number, the loonheffingennummer, within 7 days.
There is also a middle route that is easy to miss. A foreign company that is not obliged to be a withholding agent can opt into that status for employees who would otherwise have to settle Dutch tax or contributions themselves. It then has to run a Dutch payroll administration for those employees, and it cannot pick and choose: withholding only wage tax, or only national insurance contributions, is not allowed. How that works in practice is in how a foreign company runs payroll in the Netherlands.
Sources:
Belastingdienst, Registering as an employer
Belastingdienst, You opt for withholding agent status
Where the choice bites: research staff
WBSO, the Dutch tax credit for research and development, follows the payroll. RVO, the Netherlands Enterprise Agency, requires the applicant to organise and carry out the research itself and to have the staff on its own payroll, and states that every company with research staff on its own payroll applies for itself. Hours registered for people who are not on the applicant's payroll are one of the reasons RVO gives for correcting a decision afterwards.
So a deep-tech company that puts its engineers with a payroll company, and then applies for a research credit, has the two halves in the wrong places. The test is set out in WBSO for foreign-owned companies. Why this kind of money tends to come before a funding round is the subject of Equity-free money first.
Source: RVO, Handleiding WBSO 2026, sections 1.2 and 1.2.1 (PDF, in Dutch)
Where the choice bites: staff from outside the EU
To employ a highly skilled migrant from outside the EU, the EEA or Switzerland for longer than 90 days, the employer has to be recognised as a sponsor by the IND, the Dutch immigration service, and conclude an employment contract with that person. Among the conditions for recognition is that the organisation is listed in the Business Register in the Netherlands, and a recognised sponsor carries duties to inform the IND, to select and inform the migrant carefully, and to keep records.
Read together, those two facts settle a lot. The sponsor is the employer. A company with no Dutch registration cannot be its own sponsor, so it either relies on another company being the sponsor for its own employees, or it builds the entity. The route to recognition is described in how a company becomes an IND recognised sponsor.
Sources:
Business.gov.nl, Employing highly skilled migrants
IND, Highly skilled migrant
What neither option settles
Three things stay open whichever way the choice goes.
- Corporate income tax. Using a payroll company does not decide whether your own activity here is a permanent establishment. That is a separate test, described in when a foreign company has a permanent establishment.
- Where the work is done. Rules on research credits look at where the work happens, not only at who pays the wage.
- The shape of the group. Whether the Dutch company is a branch or a subsidiary changes liability and reporting, which is compared in branch or subsidiary in the Netherlands.
Companies that expect to stay usually treat an employer of record as a bridge rather than a destination, and ask a Dutch tax adviser and an employment lawyer to look at the switch before the first contract is signed, because moving staff from one employer to another later is an employment law question as much as a tax one.
Sources
- Business.gov.nl, Payrolling, checked 22 September 2026
- Business.gov.nl, Employing highly skilled migrants, checked 22 September 2026
- Belastingdienst, You opt for withholding agent status, checked 22 September 2026
- RVO, Handleiding WBSO 2026 (PDF, in Dutch), checked 22 September 2026
- IND, Highly skilled migrant, checked 22 September 2026
Checked on 22 September 2026. This page is general information, not legal, tax or investment advice. Rules change: check the official source, or ask an adviser, before you act on it.
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