How to pay international contractors in the Netherlands

Step #3: Draft and sign a model agreement

To help guard against misclassification, employers and contractors in the Netherlands can use a "model agreement," a standard contract drawn up by the Dutch Tax and Customs Administration for zzp'ers and their clients. The tax authority offers three kinds of model agreements:

• General model agreements, which cover most standard contractor-client relationships.
• Sector- or profession-specific model agreements, which are specific to certain industries and types of work.
• Individual model agreements, which are created by contractors and then offered for free use by anyone else working in the same profession.

It's also an option to draft your own model agreement and then have it assessed by the Dutch Tax and Customs Administration, but with so many accepted model agreements already available for use, it's generally faster to use an existing agreement.

Step #4: Provide safe working conditions

While contractors in many countries are excluded from the statutory benefits employees are entitled to, the Netherlands offers some of the best protections in the world for self-employed people. Employers of all workers, including zzp'ers, are required to provide a safe and healthy workplace that meets Dutch labor law requirements.

Step #5: Determine your contractor's working hours and rest times

Rules about working hours and rest periods are laid out in Dutch labor laws, but they don't always apply to contractors. The notable exception is for zzp'ers who work in roles where the safety of a third party could be at stake. For example, contractors who work in transport, such as drivers, are required to take mandatory rest days.

Step #6: Determine the best way to pay your contractors

Before you can pay contractors in the Netherlands, you need to determine how you'll pay them. With the rise of global workforces and remote work, employers now have more choices than ever for making international payments to contractors. Here are some options:

• Bank wires. You can open a Dutch bank account and use it to deposit funds into Dutch contractors' accounts or use your bank to send a global wire transfer to pay a Dutch contractor. This is a common form of payment in the Netherlands.
• International money orders. This long-standing payment method can be slow—especially because the employer needs to physically purchase the money order, and the contractor needs to physically deposit it upon receipt. Money orders can also come with fees and bad exchange rates. This is not common practice in the Netherlands. The use of money orders is not at all common in the Netherlands.
• Digital wallets or payment platforms. Some employers use platforms like Wise to transfer money across borders. Remember that exchange rates can change from day to day, making it difficult to predict your outgoings.
• Global payroll services. Typically, contractors aren't included in payroll, since they aren't subject to the same withholdings as employees. Instead, they invoice for their services, which goes through accounts payable for many companies. This is a common form of payment in the Netherlands.

See Rippling

Step #7: Use global payroll software to process payments 

As you saw in Step #6, there are multiple ways to pay contractors in the Netherlands. But the fastest and simplest way is paying contractors through global payroll software. This is a common form of payment in the Netherlands.

With Rippling, you can pay employees and contractors across the world in one place. Here’s a preview of how Rippling’s global payroll system works:

Step #8: Stay compliant with tax laws

While tax laws aren't known for their simplicity anywhere in the world, they're particularly complex in the Netherlands.

One of the major compliance issues you'll want to avoid is known as "permanent establishment." Even if your business is based outside of the Netherlands, if you hire Dutch workers and they conduct certain kinds of business, you could be found to have a permanent establishment in the Netherlands and be required to pay local corporate taxes. The main trigger for this is if your Dutch workers generate revenue for your company; i.e., if they work in IT or customer support, they're likely on the right side of this rule, but if they work in sales, they may not be.

While employers are exempt from payroll taxes for contractors in many countries, this isn't true in the Netherlands, where zzp'ers are entitled to certain worker protections. For example, employers have to pay more employee insurance for contractors than for employees, since their work arrangements are short-term.

Keep in mind, also, that foreign employers are required to pay VAT on all invoices for contractors and subcontractors. VAT can typically be deducted as input tax.

Effortlessly manage contractors around the world

Expanding your international workforce has never been easier. With Rippling, you can pay international contractors in the Netherlands and around the world in one system.

FAQs about paying contractors in the Netherlands

Does Dutch minimum wage apply to independent contractors in the Netherlands?

Yes. Unlike in many countries, employers are required to meet minimum wage thresholds for both employees and contractors in the Netherlands. As of the beginning of 2024, the Dutch minimum wage (for people over 21 years of age) is 13.27 EUR per hour. The wage adjusts every six months.

Due to the unique nature of employment and labor laws in the Netherlands, it's important to ensure you're up-to-date on all the specifics.

Do Dutch contractors get benefits?

Independent contractors in the Netherlands aren't entitled to all the same benefits as employees, but they have some entitlements, including:

• Minimum wage
• Safe and healthy workplace requirements
• Working hours and rest days (in certain industries)

Can you pay contractors in the Netherlands in your home currency?

It's typical to pay contractors in the Netherlands in their home currency, the euro, so they can avoid fees and exchange rates. You can pay Dutch contractors in a different currency, but you'll need to explicitly document the agreement in writing.

Many international payment providers, like Rippling, support contractor payments in either euros or your currency.

Can you manually pay contractors in the Netherlands?

Yes, and many small business owners choose to manually process contractor payments as a cost-cutting measure. But manual payroll can be very time-consuming, especially as your business grows and if you work with multiple contractors in the Netherlands or across borders.

It's also important to note that manually processing payments comes with some risks:

• Compliance. Running payroll manually means assuming the risk of human error and omission. Protect yourself and your business with Rippling, which automatically enforces compliance with any applicable local laws—no matter where your contractors live.
• Security. Manual payroll processing also poses security risks, especially if you use spreadsheets or paper records. Sensitive contractor information can be lost, stolen, or misused.
• Contractor experience. Manual payments can be time-consuming. They also lack transparency when it comes to payment timelines and exactly what contractors are being paid for, creating a frustrating payment experience for contractors.

How do you turn a contractor into an employee in the Netherlands?

While hiring independent contractors over full-time employees can come with increased flexibility and some financial benefits, sometimes you do need a full-time employee. The challenge is making sure all the legal requirements are in order: The Netherlands' labor laws require payroll deductions, benefits, and more for employees that you don't have to worry about for contractors. Plus, in order to hire employees, you'll need a legal entity in the Netherlands—whether that's through establishing your own entity or using an employer of record (EOR) service.