Payroll Services: Simplifying Your Business Expansion to the Netherlands

Starting or expanding your business in a new market can be challenging. In these early stages, you need to focus on work that truly adds value. Regardless, navigating legal and compliance processes can quickly become overwhelming. That’s why many companies rely on payroll services to simplify their expansion to the Netherlands. Payroll services – including Employer of Record (EOR) solutions – have become a popular choice for international businesses looking to grow efficiently.

A reliable payroll partner should do more than just manage monthly wages. The right provider supports your strategic goals and helps your company build a strong foundation in a new market.

Read on to discover how payroll services can support your business growth far beyond administration.

Payroll services let you test new markets with limited risk

Payroll outsourcing allows you to explore new markets while minimising risk. When you outsource your payroll operations to an Employer of Record, they handle most of your legal and administrative responsibilities abroad.

With fewer formal obligations, your business can expand to new countries with minimal investment. You save valuable time by letting a trusted third party take care of complex compliance tasks. If a market doesn’t align with your goals, you can exit quickly without losing significant time or resources.

Payroll services make international deployment smoother

Foreign businesses often choose the Netherlands for its highly skilled and educated workforce. The country also encourages global hiring, including non-EU employees. However, the Dutch Immigration Department (IND) requires companies to become IND recognised sponsors before employing non-EU talent.

The process can be long and costly, especially if you have a small business. A Dutch payroll company that already holds IND recognition can make international deployment much simpler. By outsourcing your payroll services for small business to a recognised sponsor such as Octagon Professionals, you avoid lengthy registration procedures. And that’s why we handle all payroll requirements, paperwork, and compliance obligations on your behalf.

Develop Competitive, Market-Aligned Remuneration Packages

Designing attractive remuneration packages is difficult enough in your home country, let alone abroad. That’s where an Employer of Record becomes invaluable. By working with an experienced payroll partner, you can offer your local staff competitive benefits aligned with market standards.

At Octagon, we know how vital the right people are to your success. We use our market knowledge and connections to help you build appealing offers that attract and retain talent. As your Employer of Record in the Netherlands, our payroll services enable you to provide expat-friendly benefits such as full sickness coverage and pension schemes, giving your employees confidence and security.

Stay Compliant with Changing Regulations

When setting up a new business in the Netherlands, it is important for you as an employer to keep update with constantly changing regulations from the government. Furthermore, the Dutch Labour Law is very protective of employees in the Netherlands and your responsibility as an employer is to ensure the standard conditions of employment. The Dutch Labour Law contains many specifics that are not common in other countries. These can include 8% holiday allowance, sickness coverage, probation period, and pension.

Depending on your business sector, one important aspect to keep in mind is whether you may have to work with a collective labor agreement (CAO). CAO is a written agreement between the employers and trade unions about the labor conditions for all employees. If there is no CAO, you need an individual agreement with your employee in terms of the work conditions.

By outsourcing your operations with payroll services, you can gain access to a team of experts who understand the complicated realm of government regulations and legislation and can take care of your human resource-related issues.

Meet All Tax and Compliance Requirements

Labour laws and tax regulations from foreign countries can be indistinct and time-consuming. We understand that new businesses need time to adjust in order to comply with local regulations – Unfortunately, the law does not afford you that extra time.

In the Netherlands, business owners are required to register with the Dutch Tax and Customs Administration (Belastingdienst). Upon employing staff in the Netherlands, you are obliged to pay wage tax and other social premiums to the Tax and Customs Administration on a monthly basis, with payments due by the end of the month following payroll. There are many social security schemes that benefit employees in the Netherlands.

Generally speaking, expanding to a new country involves considerable administrative duties. Meanwhile, labour laws, data requirements, and tax regulations are complicated. Therefore, by partnering with a trusted payroll services provider, tax and compliance experts will take care of your employees’ pay checks, along with accompanying tax withholding obligations and social security contributions.

How payroll in the Netherlands works: the employer’s core obligations

Running payroll in the Netherlands means registering as an employer, withholding wage tax and national insurance every pay period, and filing a monthly payroll tax return. On top of that, Dutch law sets minimum pay, holiday allowance and sick pay rules that payroll must apply correctly from the first payslip.

• Employer registration. Before the first salary payment, the employer registers with the Belastingdienst and receives a loonheffingennummer, the Dutch payroll tax number.
• Wage tax and national insurance. Each pay period, the employer withholds loonheffing, which combines wage tax and national insurance contributions. Our Dutch wage breakdown shows how gross salary becomes net pay.
• Employer contributions. The employer also pays premiums for employee insurance, such as unemployment (WW) and disability (WIA) cover, plus an income-related contribution for health insurance (Zvw).
• Monthly payroll tax return. The employer files a payroll tax return (loonaangifte) and pays by the end of the following month.
• Minimum wage. From 1 July 2026, the statutory minimum wage for employees aged 21 and over is €14.99 gross per hour. Read more about minimum wage and payroll for small businesses.
• Holiday allowance. Employees receive holiday allowance of at least 8% of their gross salary, usually paid in May or June.
• Sick pay. During illness, the employer continues to pay at least 70% of salary for up to 104 weeks.
• Tax-free allowances. The work-related costs scheme (werkkostenregeling) sets how much the employer can give in tax-free allowances and benefits.

Payslips, pensions and the 30% ruling in Dutch payroll

Beyond tax, Dutch payroll has to handle the details employees check most closely. These include the payslip, pension contributions and, for many international hires, the 30% ruling. Errors here quickly undermine trust, so they deserve the same care as the tax filings.

• Payslip (loonstrook). Employees receive a written payslip showing gross pay, deductions and net pay with the first payment and whenever the amounts change.
• Pension. There is no general legal duty to offer a pension. However, many sectors have a mandatory industry pension fund, and many collective labour agreements require pension participation. Read our overview of pension schemes in the Netherlands.
• 30% ruling. Eligible employees recruited from abroad can receive part of their salary tax-free. Payroll applies the ruling once the tax authority has approved it. Our 30% ruling guide explains the current conditions.

Three ways to run payroll in the Netherlands

Foreign companies can run Dutch payroll in three ways. They can set up a Dutch entity and run payroll in-house, set up an entity and outsource payroll, or use an employer of record without an entity. The best option depends on your team size, timeline and long-term plans.

Option	Legal employer	Dutch entity needed	Who runs payroll	Best for
Own entity, in-house payroll	Your Dutch BV	Yes	Your own payroll team	Established teams with local HR capacity
Own entity, outsourced payroll	Your Dutch BV	Yes	A payroll provider	Companies that want their own entity without building a payroll team
Employer of record	The employer of record	No	The employer of record	First hires, market tests and hiring before an entity exists

Our guide to hiring employees in the Netherlands as a foreign company walks through each route in more detail. Octagon offers Payroll Administration for companies with their own entity and Payroll EOR Administration for companies without one.

Partner with a Trusted Payroll Services Provider in the Netherlands

Your success in the Netherlands depends on finding the right partner for your payroll services and HR outsourcing needs. You don’t need to establish a local entity to hire the talent you want.

At Octagon Professionals, we manage everything from payroll administration and pension schemes to social security contributions and employment contracts. Our cloud-based HR portal gives you real-time access to timesheets, expenses, and leave requests – ensuring transparency and accuracy across your operations.

Take the first step towards compliant, efficient business growth. Schedule a consultation with Octagon Professionals today and simplify your expansion into the Dutch market.