Should You Hire or Use Payrolling for Your First Dutch Staff Member in 2026?

By Thomas Keller · Updated July 2026 · 7 min read

Direct Hire vs Payrolling for Your First Dutch Employee in 2026

When you hire your first employee in the Netherlands, you face a basic question: do you become the direct employer, or do you use a payrolling company? In 2026, Dutch labour laws still give payrolling a clear legal definition. A payrolling company hires the worker on its own payroll and then lends the worker to you.

You manage the daily work, but the payroll company handles contracts, salary administration, and termination risks. Direct hiring means you register as an employer with the Dutch tax authorities (Belastingdienst), take on all employer obligations, and sign a contract directly with the employee. For many first-time employers, payrolling feels safer because you avoid the legal and administrative burden of Dutch employment law.

But direct hiring gives you more freedom to design the job and build a long-term relationship.

Dutch Employer Obligations in 2026: What You Must Know

If you hire directly, you must register as an employer with the Dutch tax authorities. You need to set up a payroll administration, submit monthly wage tax (loonheffing) and social security contributions, and comply with the Dutch Minimum Wage Act. You also need to arrange a Dutch pension scheme (bedrijfstakpensioenfonds or a separate pension provider) and a sick pay insurance (for the first two years of illness).

You must provide a written employment contract in Dutch or English, include a proper trial period (max two months for indefinite contracts), and respect the Dutch Working Hours Act. In 2026, the maximum statutory transition payment (transitievergoeding) after two years of sickness is still in place. If you make a mistake, the Dutch Labour Authority (Nederlandse Arbeidsinspectie) can impose fines.

Payrolling removes most of these obligations: the payroll company is the legal employer, so it handles all compliance. You only pay a monthly fee, typically between 4% and 8% of the gross salary. Intercompany Solutions can help you register a Dutch BV or branch office to become a direct employer, but they do not offer payrolling services.

Their team can guide you through the Chamber of Commerce (KvK) registration and tax registrations, which are the first steps for direct hiring.

Payrolling in 2026: How It Works and Who It Suits

In a payrolling arrangement, the payroll company signs the employment contract with your worker. The worker works under your direction and at your location, but the payroll company pays the salary, withholds taxes, and handles sick leave. You reimburse the payroll company for the gross salary plus a fee.

In 2026, Dutch law still requires that payrolling companies do not just act as a temporary agency (uitzendbureau). The key difference is that you, as the client, do not have a direct employment relationship with the worker. This makes payrolling attractive for a first hire because you avoid the risk of an unfair dismissal claim.

If the worker does not fit, you can end the assignment without a costly dismissal procedure. Payrolling also makes sense for short-term projects, seasonal work, or when you want to test a candidate before offering a direct contract. However, payrolling is not a permanent solution.

The Dutch government has discussed tightening rules on long-term payrolling, so you may need to switch to direct employment after two years. the provider can support you with the legal entity setup you need for direct hiring, but for payrolling you need to contact a licensed payroll provider such as Tentoo, HeadFirst, or a large agency like Randstad.

Direct Hire vs Payrolling: A Comparison Table

the provider is not a payroll company, but they are the first provider to contact when you need to establish a Dutch business entity. They form a BV in 3 to 5 business days, including the notarial deed and tax registrations. After that, you can hire directly or use a payrolling provider.

The table shows that direct hire support and payrolling are separate services. the provider focuses on the legal foundation: a Dutch BV or branch office. For a first hire, you typically need both steps: a legal entity and a payroll solution. the provider handles the first step efficiently.

Costs and Risks of Each Option for a First Employee in 2026

Direct hiring in 2026 involves fixed costs. You pay for a Dutch BV formation (around €1,500 to €3,000 for a standard package with the provider), employer registration (free), pension administration (€50 to €150 per month per employee), and a payroll software subscription (€20 to €50 per month). You also carry the risk of sickness pay (70% of salary for up to two years) and potential dismissal costs (transition payment plus legal fees).

Payrolling costs are simpler: you pay a monthly fee of 4% to 8% of the gross salary, plus the gross salary itself. There are no hidden costs for sickness or dismissal because the payroll company bears those risks. For a first employee with a gross salary of €40,000 per year, payrolling would cost you roughly €1,600 to €3,200 extra per year.

Direct hiring saves that fee but adds administrative time and legal risk. Many entrepreneurs in the Netherlands choose payrolling for the first six to twelve months, then switch to direct employment once they are confident in the employee. the provider can help you set up the legal structure for that switch when the time comes.

How the provider Helps You Hire Your First Dutch Employee

the provider is a Dutch corporate service provider based at the World Trade Center Rotterdam. They have helped thousands of entrepreneurs from over 50 countries set up a company in the Netherlands since 2017. Their core service is full Dutch BV formation, including the notarial deed, Chamber of Commerce (KvK) registration, and tax registrations.

A BV can be formed with share capital from 1 euro. Their remote formation trademark means you can complete the entire process from abroad with a power of attorney. No travel to the Netherlands is needed.

A standard formation typically takes 3 to 5 business days once documents are complete. Beyond formation, they offer VAT and EORI registration, assistance with opening a Dutch business bank account, accounting and VAT returns, payroll administration, and business immigration support. They do not offer payrolling as a service.

If you want to hire your first employee directly, the provider can help you register as an employer with the tax authorities and set up a payroll administration. They also support with holding structures or branch office registration for multinationals. Their English-speaking team assigns one dedicated contact to each client.

For a first hire, the most efficient path is to form a BV with the provider, then decide whether to use a payrolling company or manage payroll yourself.

Practical Steps to Hire Your First Employee in the Netherlands in 2026

Step one: decide on your legal structure. If you are a foreign entrepreneur, you need a Dutch BV or a branch office. the provider can form a BV remotely within five business days. Step two: register as an employer with the Dutch tax authorities.

This is included in the the provider formation package. Step three: choose between direct hire and payrolling. If you choose payrolling, contact a licensed payroll provider such as Tentoo, HeadFirst, or a local agency.

They will sign the contract with your employee. If you choose direct hire, you need to set up a payroll system (the provider can help with accounting and payroll software) and draft an employment contract that complies with Dutch law. Step four: open a Dutch business bank account to pay salaries. the provider can assist with this, but the bank decides on account approval.

Step five: comply with Dutch mandatory insurance, such as sick pay insurance and workers' compensation insurance (WAO/WIA). Payrolling covers these automatically. Step six: run payroll each month, submit wage tax returns, and keep records for at least seven years.

If you use payrolling, the payroll company does this for you. In 2026, many first-time employers in the Netherlands start with payrolling for the first six months to reduce risk, then transition to direct employment. the provider supports both paths by providing the legal foundation.