How to employ employees in the Netherlands
Published on 27th Jan 2022
Hiring employees, registering a branch or incorporating are options for international businesses setting up in the country
If international companies are considering expansion of their business to Europe, the Netherlands might be a good option to incorporate a branch or entity given its attractive business climate. What are options that are open to foreign companies – and US businesses specifically – that are looking to employ employees in the Netherlands?
For US companies looking to conduct business in the Netherlands by the use of employees there are a number of options, including hiring employees, registering a branch or incorporating a legal entity in the country.
- The US entity can hire employees in the Netherlands without the need to set up a branch or legal entity.
- The company should take a decision on how wage tax and social security contributions will be paid. Generally, the US company engages a payroll company in the Netherlands for this purpose.
- Depending on the position of the employee(s) in question, there is a risk of creating a permanent establishment, which may lead to the company's obligation to pay corporate taxes in the Netherlands.
Registration of a branch
The branch of the US company will be registered at the Dutch trade register.
The branch is registered as the employer and liable for the withholding of wage tax and social security contributions under Dutch law.
Incorporating a legal entity
The legal entity will be registered at the Dutch trade register and will be liable for all legal obligations under Dutch law, under which the withholding of the wage tax and social security contributions.
Osborne Clarke comment
It is generally easy to hire employees as a US company in the Netherlands. If the company does not intend to incorporate a legal entity in the Netherlands, it should be kept in mind that additional steps are required from a tax law perspective.