EOR vs subsidiary
Side-by-side comparison of Employer of Record and Dutch BV entity setup. Covers setup timelines, compliance obligations, exit flexibility, and the break-even point where entity setup becomes more cost-effective.
EOR: 2 to 4 weeks vs Entity: 10+ weeks
Making the right structure decision
Choosing between an Employer of Record and establishing your own legal entity in the Netherlands is one of the most consequential decisions for any international organisation expanding into the Dutch market. The right structure affects your speed to market, ongoing operational costs, compliance exposure, and long-term flexibility. Several factors drive this decision: projected headcount, expected duration of your presence, complexity of your compliance obligations (including sector-specific CAO requirements), and your exit strategy should business conditions change.
A Dutch BV provides full operational independence but requires notarial incorporation, Chamber of Commerce registration, corporate tax enrolment, and ongoing obligations including annual financial statements and UBO registry filings. An EOR eliminates those requirements but places the employment relationship under a third-party entity and introduces a per-employee management fee. Octagon advises on the decision based on your specific circumstances and supports both models, including a structured migration when the time comes to transition.
Side-by-side at a glance
Employer of Record: operational in 2 to 4 weeks, no legal entity required, zero setup costs, full compliance managed by the provider, standard notice period exit, best fit for 1 to 20 employees, project-based engagements, or market testing.
Own entity (Dutch BV): setup in 8 to 16 weeks, requires notary and KVK registration, one-time incorporation costs, you manage compliance or outsource it, complex dissolution process, best fit for 20+ employees and a permanent presence in the market.
When does an entity make sense?
The break-even point between EOR and entity setup typically falls around 15 to 20 employees maintained for three or more years. Below that threshold, the administrative overhead, legal costs, and compliance burden of running your own Dutch BV almost always exceed the cumulative EOR fees. Above it, the per-employee economics begin to favour a dedicated entity, provided you have the internal capacity to manage Dutch employment law obligations.
Many organisations take a phased approach. They enter the Netherlands through an EOR to validate the market, build their initial team, and develop local operational knowledge. Once headcount and strategic commitment reach the tipping point, they transition to their own entity with full confidence in the regulatory environment. Octagon supports both models and manages the transition when the time comes.
Comparison factors
Cost analysis
Detailed breakdown of EOR fees versus BV setup and maintenance costs, with break-even modelling based on your projected headcount.
Timeline comparison
EOR operational in 2 to 4 weeks versus 8 to 16 weeks for BV incorporation, including notarial deeds and KvK registration.
Risk assessment
Compliance risk, permanent establishment exposure, and operational dependency analysis for each employment structure.
Transition planning
Structured migration path from EOR to BV when headcount reaches the break-even threshold, with employee transfer protocols.
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