NetherlandsThe Netherlands punches far above its size for US startups: near-universal English fluency, a dense senior tech talent pool around Amsterdam and Eindhoven, and a business culture that works well with American teams. What surprises founders is the benefits math: a mandatory 8% holiday allowance on top of salary, a statutory transition payment on almost every employer-initiated exit, and an obligation to keep paying a sick employee for up to two years.
Here's what you actually need to know.
Quick facts
| Netherlands | |
|---|---|
| Currency | Euro (EUR) |
| Standard work week | 40 hours, 5 days |
| Payroll frequency | Monthly |
| Employer statutory cost | ~23-34% on top of gross salary |
| Holiday allowance | 8% of annual salary, mandatory, typically paid in May |
| Minimum wage | €14.99/hour (from July 2026) |
| Probation | Up to 2 months, written only |
| Notice period | 1 month, rising to 4 months with tenure |
| 13th month pay | Not mandatory (the 8% holiday allowance is) |
| Employees paid in | EUR, required by law |
First decision: contractor or employee?
Dutch freelancers (zzp'ers) are a large, established part of the market, and a genuinely independent contractor with multiple clients is a fine way to start.
The Netherlands has been actively tightening enforcement against false self-employment, with new rules taking effect through 2025 and 2026. Someone working fixed hours, embedded in your team, exclusively for you, is an employee in the tax authority's eyes regardless of the contract label, and reclassification means back payroll taxes and benefits. The rough test: if you'd be uncomfortable with them taking a second client, they're probably an employee.
When someone becomes core to the team, you convert them through an employer of record (EOR) or your own Dutch entity.
Paying contractors in the Netherlands
The mechanics:
- Collect a W-8BEN before the first payment. It certifies the contractor is a non-US person, so you generally don't issue a 1099. Have your accountant confirm.
- Sign a real contract with scope, rate, IP assignment, and termination terms, and keep the relationship genuinely independent given the enforcement climate.
- Pay in USD or EUR, their choice. Contractors can invoice in either. Per-invoice bank wires cost $25-45 plus an FX spread hidden in the rate.
Shor pays Dutch contractors over local rails at a flat disclosed 2% FX margin, for a $19/month per-contractor fee. Contracts, W-8BEN collection, and invoicing are built in.
Hiring full-time employees
Employer-side statutory costs on top of gross salary:
| Contribution | Rate (employer side) | Notes |
|---|---|---|
| Social security (employee insurance schemes) | ~23.4% | Unemployment, disability, and related schemes; varies by sector and employer size |
| Health insurance contribution (ZVW) | 6.1% | Capped at a maximum wage base |
| Pension | ~5% (industry average) | Sector pension funds can be mandatory under a CAO |
Headline employer load: roughly 23-34% on top of gross salary depending on sector premiums and pension coverage, plus the 8% holiday allowance (vakantietoeslag), which accrues monthly and is typically paid out in May. Statutory rates change; confirm with your accountant.
Two 2026 items to have on your radar. The minimum wage rose to €14.99/hour in July 2026. And the 30% ruling, the tax break that lets qualifying inbound employees receive part of their salary tax-free, stays at 30% through 2026 but is set to drop to 27% from January 2027, with a salary cap now applying. If you're relocating someone to the Netherlands, model the offer on the post-2027 numbers and confirm eligibility with a Dutch tax adviser.
Many sectors are covered by collective labour agreements (CAOs) that set minimum salaries, leave enhancements, and pension obligations, so every hire starts with a CAO applicability check.
Employees must be paid in EUR, monthly, with payroll tax filed to the Belastingdienst.
Leave and benefits
- Annual leave: 20 days statutory minimum (CAOs and market practice often add more)
- Sick leave: the employer keeps paying at least 70% of salary for up to 2 years, with reintegration obligations. This is the single biggest employer risk in Dutch employment.
- Maternity leave: 16 weeks at full pay, state-funded
- Paternity leave: 6 weeks total, paid (1 week at full pay, then 5 weeks at 70% via the state)
- Public holidays: ~8 days; whether they're paid days off depends on the CAO or contract
Beyond statute, competitive Dutch offers commonly add supplemental pension, travel allowance, a work-from-home allowance, meal benefits, and private disability insurance.
Ending employment
The Netherlands has strictly regulated dismissal routes; an employer can't simply terminate. Expect:
- Approval required: economic and long-term incapacity dismissals go through the UWV (the employee insurance agency); performance and conduct cases go through the courts. Mutual separation agreements are the common practical route, with a statutory cooling-off period.
- Notice periods by tenure: 1 month under 5 years of service, 2 months at 5-10 years, 3 months at 10-15 years, 4 months beyond that.
- Transition payment (transitievergoeding): one third of a month's salary per year of service on employer-initiated termination, capped in 2026 at €102,000 or one year's salary, whichever is higher.
- Sick employees are heavily protected from termination.
- A final settlement covering accrued salary, outstanding vacation days, accrued holiday allowance, and the transition payment.
Probation (maximum 2 months, and only if written) is the one window where separation is simple. After that, plan every exit with counsel or your EOR.
Documents we'll collect from your employee at onboarding
BSN (citizen service number), a valid ID document (passport or EU identity card), and a Dutch bank IBAN for salary. The BSN is the blocker: payroll cannot run without it.
What it costs through Shor
- Contractors: $19/month each
- Full-time employees (EOR): $449/month each, payroll tax filings, employee insurance, holiday allowance accrual, and sick pay administration handled
No setup fees, no annual lock-in, and the FX margin is a flat disclosed 2%. The pricing calculator shows the full Netherlands math.
Next steps, depending on where you are: the EOR pricing comparison puts published provider prices side by side, and EOR vs. your own entity has the breakeven math for when a local entity starts to win. To see the Netherlands against the rest of our coverage, the reference tables compare employer costs, notice periods, and public holidays across every country here. Already with another provider? Switching EOR providers covers the traps worth planning around.
FAQ
Can I pay Dutch employees in USD? No. Salary must be paid in EUR through Dutch payroll. Contractors, however, can invoice in USD or EUR.
What is the holiday allowance? A mandatory 8% of annual gross salary, accrued monthly and typically paid as a lump sum in May. Budget it into every offer: a €70,000 salary really costs €75,600 before social contributions.
What does an employer of record in the Netherlands cost? With Shor, $449/month per employee, plus the statutory employer contributions (roughly 23-34% of gross salary) that any employer pays. Deel and Remote charge $599-699/month for the same coverage.
What is the 30% ruling? A Dutch tax facility that lets qualifying employees recruited from abroad receive a portion of salary tax-free. It remains 30% through 2026 and is set to drop to 27% from January 2027, with a salary cap. Eligibility has conditions (salary thresholds, recruited-from-abroad distance rules), so confirm with a Dutch tax adviser before promising it in an offer.