1Three ways to work, in a nutshell
2The three routes
A standard employment contract. Your employer handles tax, social security and statutory protections.
Your own registered business, usually a sole trader, invoicing clients directly.
You work at a client's site; a payroll or staffing company employs you and pays your salary.
3Protections compared
| Employee | Payroll contractor | Freelancer | |
|---|---|---|---|
| Sick pay | At least 70% for up to two years | Usually the same | None; buy disability insurance |
| Pension | Usually an employer scheme | Depends on the payroll company's agreement | Self-funded |
| Unemployment (WW) | Insured | Insured | Not insured |
| Paid holidays | 4× weekly hours at least, plus 8% holiday pay | Usually the same | Unpaid |
| Dismissal protection | Strong | Against the payroll company; the assignment can end sooner | None; a client can stop |
4Tax and admin compared
| Employee | Payroll contractor | Freelancer | |
|---|---|---|---|
| Tax | Payroll tax withheld | Payroll tax withheld | Pay through a provisional assessment |
| Deductions | Tax credits; 30% ruling if eligible | Tax credits; 30% ruling possible | Entrepreneur deductions and business costs |
| VAT | No | No | Usually 21% on invoices, quarterly returns |
| Liability | Employer carries most | Mostly the payroll company | You, unless insured |
| Admin | Almost none | Almost none | Bookkeeping, VAT, annual return |
5Which route fits you?
What matters most?
6False self-employment
A freelance contract that works like a job in practice, with one client directing your work long-term, can be reclassified as employment. Since 2025 the Belastingdienst enforces this again, and the client can face back taxes.
7Which one pays more?
None of the protections above show up in a take-home figure, which is why a pure net comparison usually flatters freelancing. Price in sick pay, pension and time off before deciding. See ZZP vs employee.
8Common questions
Is payroll the same as a temp agency?
Similar: both make you their employee. Payroll usually means the client found you; a temp agency finds the work for you.
Can I switch between routes?
Yes, many people move between them over their career.
Does the route affect my mortgage?
Yes: lenders want employer statements, or one to three years of figures for freelancers. See how much can I borrow.
And my residence permit?
Some permits tie you to employment. Check with the IND before switching.
Sources
This article is based on these official pages. If anything here differs from them, the official page is right.
- Checken of ik ondernemer ben voor de inkomstenbelasting (in Dutch)
- Urencriterium (in Dutch)
- Zelfstandigenaftrek (in Dutch)
- Voorlopige aanslag Zorgverzekeringswet (Zvw) (in Dutch)
Ready to run your own numbers?
Employee vs ZZP vs contractor calculator