Hire Contractors In the Netherlands

The Netherlands is one of the most advanced hubs for innovation, sustainability, and digitalization. It is a dynamic region where you can connect and collaborate within international ecosystems to enjoy vital growth opportunities.

In 2022, the Netherlands ranked first in the Education First English Proficiency Index. This has particularly been advantageous for businesses that wish to hire contractors in the Netherlands. 

It includes benefits such as reduced chances of communication errors, increased collaboration, and improved productivity.

If you, too, are interested in hiring international workers in the Netherlands, then this article is for you. Let’s get started. 

How to Hire Independent Contractors in the Netherlands

The traditional way of hiring contractors in the Netherlands is directly, without the help of any contractor software. It includes some essential steps, such as

• Drafting clear project expectations and performance expectations. 
• Posting the job on platforms such as Upwork, LinkedIn, and Indeed.
• Drafting a legal agreement stating the work the independent contractor will perform and including other necessary details.
• Verifying compliance with the labor laws of the Netherlands.
• Using relevant tax forms and submitting them to the required agencies.
• Paying the independent contractors as agreed in the legal contract.

This process is undoubtedly time-consuming and can get very expensive since you must set up a business entity in the Netherlands. 

The cost will increase from handling the set-up costs to job-posting, sourcing, and onboarding. 

Therefore, it is best suited for businesses looking to hire contractors in the Netherlands for long-term projects.

Hiring Contractors through Skuad AOR

Another way to hire in the Netherlands is with an Agent of Record, such as Skuad. This comprehensive platform streamlines the entire contractor onboarding process. 

Skuad’s AOR solutions in the Netherlands include various features, such as

• Drafting compliant contracts vetted by in-house legal experts.
• Making accurate payments in 100+ currencies.
• Guaranteed compliance with labor laws to reduce worker misclassification Netherlands.
• Bullet-proof privacy and data security measures to protect your business.

How to Pay Contractors in the Netherlands

Most businesses pay contractors in the Netherlands directly through bank transfers or paper checks. 

However, this approach is usually very expensive and demands a long processing time.

An easy and low-cost way to pay contractors is through an agent of record in the Netherlands, like Skuad. It features various capabilities like,

• Automated invoicing and payments.
• Strict adherence to regulations such as 1099s, IR35, and more.
• Real-time expense tracking
• Competitive FX rates and
• Multiple payment options, among others.

Direct Hiring vs Hiring Contractors via Skuad: The Better Method

Here is a detailed comparison of the two most commonly applied methods of hiring international workers in the Netherlands.

Cost of Hiring Contractors in the Netherlands

If you hire international workers in the Netherlands directly, the cost will be extremely high. Apart from the huge set-up fees, you will need to invest a good amount of resources in recruiting HR professionals who will help you with shortlisting and onboarding contractors. 

If you’re thinking about - ‘how much does it cost to hire a contractor in the Netherlands?’, With Skuad, you do not have to worry about these expenses. 

You will only need to pay the service charge, and our legal experts will handle all administrative tasks. 

Additionally, the cost will fluctuate depending on other parameters, such as the contractor's experience level, the nature of the work, or the location.

How to Convert a Contractor into a Full-Time Employee

Converting a contractor to a permanent employee is usually a straightforward process if you comply with all the labor laws of the Netherlands. 

Converting from contractor to employee salary entails a few significant steps, such as,

• Verify the employee misclassification: Carefully evaluate if the contractor can become a full-time employee at your organization based on the nature of their role.
• Make an offer: Offer the top competitive benefits and salary package to your independent contractor.
• Research the local employment laws: Review the labor laws of the Netherlands, understand its provisions, and ensure thorough compliance. 
• Formulate an employment contract: Draft a legal agreement that will outline the details of this newly established employment relationship between you and the worker.
• Onboard and add them to your payroll: Once all the documents have been signed, run a background check and add the converted employee to your existing payroll system.

Challenges of Hiring Contractors in the Netherlands

The Netherlands is undoubtedly a great place to expand your business and hire international contractors.

However, it has a few administrative requirements that can quickly become complicated without proper guidance/expertise. 

Model Agreements in the Netherlands

Under the labor laws of the Netherlands, self-employed professionals use model agreements when working for a client. 

The primary goal of these contracts is to ensure that the business relationship is not seen as false self-employment. 

They prove to the Tax Administration that the contractor is not in the client’s employ. 

There are two types of standard model agreements used in the Netherlands. They include,

• General model agreements: These cover most business relationships that do not involve employment.
• Sector or profession-specific model agreements: These are specially targeted towards individuals working according to certain sectoral or professional standards.

Other than these, there are many other rules and regulations that you need to be aware of when onboarding contractors in your organization. 

Compliance can get extremely challenging without proper legal professionals who are experts at dealing with such country-specific laws. 

One solution is to partner with contractor management software. However, this can be extremely expensive and time-consuming.

VAT and Other Tax Requirements for Contractors in the Netherlands

Under the labor laws of the country, all self-employed professionals in the Netherlands are required to pay VAT and income tax

Unlike an employee, it is the contractor’s responsibility to charge their clients VAT and pay the VAT they receive to Belastingdienst. The VAT rates comprise 0%, 9%, and 21% in the Netherlands.

Additionally, contractors are entitled to certain benefits, such as the state basic pension (AOW), parental/childbirth allowances, and childcare compensation. 

The good news is that, as an employer, you will not have to handle the paperwork for your contractor's necessary VAT and income tax deductions. However, the downside is that you have to ensure that a non-employment relationship is always followed. 

If the Tax Administration (Belastingdienst) decides that an employment relationship exists, you and the independent contractor will have to pay extra taxes, such as payroll tax. 

Understanding and, most importantly, complying with all these tax requirements can get extremely confusing when managing contractor payments in the Netherlands. 

Stricter Enforcement of Rules against False Classification of Workers

The Dutch tax authorities have been lenient toward unintentional misclassification of workers until now. 

However, starting January 1, 2025, the government has announced the immediate imposition of corrective obligations, additional assessments, and fines. 

The most common penalty is the administrative fine imposed by the Inspectorate Social Affairs and Employment (Inspectorate SZW). It can range from €500 up to a maximum of €82,000 per violation. 

Additionally, employers will be penalized for failing to adhere to minimum wage requirements, employee insurance premiums, and income-related contributions to the Health Insurance Act.

To avoid such issues, it is advisable for every company that wishes to hire contractors in the Netherlands to partner up with an AOR/contractor software service.

Hire Contractors in the Netherlands with Skuad

Partnering with Skuad’s AOR solution in the Netherlands is a great way to hire international contractors. It is a unified platform with expertise in 160+ countries and various capabilities. 

For example, with Skuad, you can easily transition your contractors to full-time employees and it is one of the cheapest way to pay contractors USA to Europe. 

We keep all employment history and past records intact so that you do not have to face any legal issues during this conversion process. 

Additionally, Skuad has a separate team of in-house legal experts who will take care of your compliance needs. 

These include managing worker classifications, drafting compliant contracts, handling all documentation and taxation requirements, and more. 

To learn more about our services, contact us today!

FAQs

1. How much do contractors charge per hour in the Netherlands?

For contract jobs in Netherlands, contractors usually charge €42 an hour. However, this is just a tentative estimate that can differ depending on the complexity of the project, the type of industry your business operates in, or the location. 

2. How do I employ someone in the Netherlands?

The best way to employ someone is through an employer of record in the Netherlands, like Skuad. It is a third-party service provider that enables you to hire and pay international employees without having to set up a local entity.

3. Can I hire a foreign contractor?

Yes, you can hire a foreign contractor in the Netherlands. For contracting employee in Netherlands you should comply with the local labor laws and taxation regulations.

4. What is the difference between a contractor and an employee in the Netherlands?

An employee works only for one organization and is entitled to various mandatory benefits, such as sick leave, maternity leave, health insurance, and so on. A contractor is an individual who works for multiple clients at the same time, usually on a project-to-project basis.