Employing people abroad: legal options for a Dutch foundation
Employing people abroad: legal options for a Dutch foundation
If someone on your team lives abroad, you need a legal construction that works in their country, not just in the Netherlands. This page explains your options and the risks of getting it wrong.
The core problem
When someone works for a Dutch foundation from another country, Dutch employment law and social security rules do not automatically apply - the country where the person lives and works almost certainly does. The foundation has no legal entity there, cannot run payroll, and cannot comply with local employment law. Getting this wrong exposes both the foundation and the worker to back taxes, penalties, and uncovered social security.
Option 1: Employer of record (the recommended approach)
An employer of record (EoR) legally employs the worker in their country of residence on your behalf. The worker signs a contract with the EoR; your foundation signs a service agreement with the EoR and pays a monthly fee. Day-to-day management stays with your organisation.
What the EoR handles
Local employment contract under local law
Payroll, wage tax, and social security contributions
Compliance with local labour law, including dismissal rules
Work permits and right-to-work checks where applicable
Why it is worth the cost
Setting up a local legal entity may take months (depending on the country), costs thousands in registration and ongoing administration, and creates local corporate tax exposure. In some countries (e.g. Belgium) the setting up phase is not even fully-digital, and one might even need to go in person to the notary to register the entity.
An EoR gets a worker compliant and on payroll within one to two weeks, with no entity required.
EoR cost is bounded.Typical fees run €500–€800 per employee per month on top of gross salary and employer contributions, plus VAT on top of the total cost (incl. salary, payroll taxes, social security contributions, admin fee). This is likely less than the cost of entity setup or non-compliance.
Country matters. EoR providers cover most countries, but terms and statutory obligations vary. Confirm coverage before hiring.
One caveat on policy changes. Adjusting an employment condition (number of holiday days, a benefit, remote work rules) is not always possible in every country. Each country has statutory minimums that override contractual terms. Request the change through the EoR: they will tell you whether local law permits it and what the alternatives are. Because the employee is not hired directly by your organization, changes to your policy don't always reflect in changes to their benefits. This may require an addendum to the EoR contract. Check with your EoR what applies in your case.
Wage tax. When you use an EoR, the EoR handles all wage tax withholding and filing in the worker's country. Your foundation has no wage tax obligation for that worker in the Netherlands or abroad.
Option 2: Freelance (short-term only)
Engaging someone as a freelancer is the simplest arrangement: no new legal structures, suitable for short assignments or project-based work where the person genuinely runs their own business and works for multiple clients.
Watch for 'schijnzelfstandigheid'
Since 1 January 2025, the Belastingdienst actively enforces rules against bogus self-employment. If someone works full-time for your organisation, receives a fixed monthly fee, takes instructions like a colleague, and has no other clients, the Belastingdienst may conclude (regardless of the contract) that an employment relationship exists. The consequences: back payroll taxes, unpaid social contributions, and fines. The worker loses the tax benefits of self-employment retroactively.
A contractor working from their country of residence is subject to that country's self-employment rules, which may require local registration or not recognise the freelance relationship at all.
Other countries may have their own version of rules against bogus self-employment.
A Dutch foundation cannot simply place a worker abroad on a Dutch contract and run Dutch payroll. Three problems make this unworkable:
Social security and tax withholding follow where work is performed. Under EU rules and most bilateral treaties, a worker working in (for example) Belgium pays into Belgian social security and may owe Belgian income tax, depending on how long they stay. Non-compliance triggers fines from local authorities. Your foundation would need to register as a foreign employer with Belgian authorities; the exact complexity the Employer of Recordavoids.
Permanent establishment risk. If a worker abroad can conclude contracts on behalf of your organisation, or if their home office constitutes a fixed place of business, local tax authorities may find your foundation has a permanent establishment there. That triggers local corporate income tax obligations.
Mandatory local employment law overrides Dutch law. Workers are protected by the law of the country where they work. Dutch dismissal procedures and sick-pay rules do not replace local mandatory protections; they are overridden by them.
Direct employment only works if the person is already on your Dutch payroll and is temporarily relocating abroad for a short period (not if you are hiring someone who lives abroad from the start). Even then, you need specialist tax and HR support to stay compliant.
Why a local entity often isn't the most logical choice
Incorporating a legal entity in the worker's country is technically valid and can make sense for other reasons (e.g. building a long-term local presence, hiring at scale, or establishing a local brand). But for compliance purposes alone, it's rarely the most efficient path for small foundations: setup might take months, ongoing administration is significant, and costs scale with every additional country. An Employer of Record achieves the same compliance at a fraction of the effort.
This page covers legal construction only (not tax filing or compliance). For those, consult a tax advisor familiar with both Dutch and local law.