How does a foreign company run payroll in the Netherlands?

A company that employs people here withholds Dutch payroll taxes as a withholding agent. It registers as an employer with the Netherlands Tax Administration, using the registration form for foreign companies, and receives a payroll taxes number. A company without a Dutch entity can also opt into that status, or let another company employ the staff instead.

Payroll taxes in the Netherlands are loonheffingen: wage tax plus national insurance contributions, the contributions for employee insurance schemes, and the healthcare act contribution. They are withheld and paid by whoever counts as the withholding agent, the inhoudingsplichtige.

This guide is for a company registered outside the Netherlands that wants people on a Dutch payroll. It explains the rules as the Netherlands Tax Administration publishes them. Where a situation turns on a tax treaty or on social security rules, the answer depends on your own country, and that is a question for an adviser rather than a web page.

Who has to withhold Dutch payroll taxes?

Whoever the Dutch wage tax act treats as the withholding agent. The Tax Administration says that a company not established in the Netherlands which employs people who live or work here must, in some situations, withhold some or all of the payroll taxes. Two situations come up most: the company has a permanent establishment here, or it posts, hires out or seconds staff to the Netherlands.

Two separate questions sit underneath that. Whether your employee pays wage tax here is settled by the tax treaty between the Netherlands and your country. Whether that employee is covered by Dutch social security is settled by European Regulation 883/2004, by social security agreements, or by national law. The two can point in different directions for the same person.

Sources:
Belastingdienst, When must you withhold payroll taxes?
Belastingdienst, You post, hire out or second personnel in or to the Netherlands

What does a company get when it registers as an employer?

A number and a letter, and quickly. According to the Netherlands Tax Administration, a company that has registered as an employer receives a payroll taxes number, the loonheffingennummer, and a payroll tax return letter within 7 days, and this usually takes about a week. A company paying employee insurance contributions also gets a sector affiliation letter, normally within 3 weeks and at most 8 weeks, and a letter with the contribution percentages within 4 weeks.

Registration runs through the same Registration form Foreign companies used for VAT, so a company that needs both can do them together. The payroll taxes number is what every payroll return and every letter from the tax office will refer to.

Source: Belastingdienst, Registering as an employer

What if the company has no Dutch entity at all?

There is a third route next to a Dutch entity and a posting. A foreign company that is not obliged to be a withholding agent can opt into that status, provided it has one or more employees who would otherwise have to settle Dutch tax or national insurance contributions through their own income tax return.

Two conditions come with it. The company has to set up a payroll administration in the Netherlands for those employees. And it is all or nothing: the Tax Administration states you cannot opt to withhold only wage tax or only national insurance contributions. Opting in brings the Dutch wage tax act into play for the company, which is also what opens the door to wage tax schemes such as the expat scheme.

Source: Belastingdienst, You opt for withholding agent status

What does payroll have to do with WBSO?

Everything, if the plan is to claim it. WBSO is the Dutch tax credit for research and development, and it arrives as a reduction of the payroll tax a company pays for its research staff. RVO, the Netherlands Enterprise Agency, requires the applicant to have those people on its own payroll, and every company with research staff on its own payroll applies for itself.

That has a hard consequence. Engineers employed by another company, including a parent abroad or a payroll company here, do not count for the company that wants the credit. So the payroll decision is taken before the funding decision, not after it. The full test is in WBSO for foreign-owned companies, and what to have ready before the first hire is in what you need before your first hire in the Netherlands.

Source: RVO, Handleiding WBSO 2026, sections 1.2 and 1.2.1 (PDF, in Dutch)

What changes if another company employs the staff?

The legal employer changes, and with it a row of other things. In a payroll arrangement you recruit the people, set the salary and supervise the work, while the payroll company formally employs them and handles the contracts, the salary administration, the pension and the payroll taxes. Business.gov.nl adds a condition that surprises some hirers: payroll staff are entitled to at least the same terms as your own employees.

The comparison is with your own staff on a fixed-term or permanent contract, so the arrangement is not a route to cheaper terms. The trade-off is not only about speed and admin. It moves who is the employer for research credits, for immigration sponsorship and for the employment relationship itself. That comparison is laid out side by side in employer of record or your own Dutch entity.

Source: Business.gov.nl, Payrolling

Sources

1. Belastingdienst, When must you withhold payroll taxes?, checked 22 September 2026
2. Belastingdienst, Registering as an employer, checked 22 September 2026
3. Belastingdienst, You opt for withholding agent status, checked 22 September 2026
4. Business.gov.nl, Payroll tax and employer registration, checked 22 September 2026
5. RVO, Handleiding WBSO 2026 (PDF, in Dutch), 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.