How a 20-Person Fintech Expanded to the Netherlands Without Setting Up an Entity

European expansion often begins with a strategic dilemma.

 

Should the company establish a local entity immediately, or begin hiring through an Employer of Record?

 

For many organizations, the instinct is to establish an entity as quickly as possible.

 

After all, it appears to provide complete operational control.

 

But in practice, the decision is rarely that simple.

 

This is particularly true when companies enter the Netherlands while their European hiring strategy is still evolving.

 

The experience of one fintech company illustrates why.

 

The Situation

 

The company was a fast-growing fintech platform headquartered outside Europe.

After strong customer adoption, leadership decided to expand into the Netherlands to support regional growth.

 

The hiring roadmap included:

 

• engineering hires
• regional sales leadership
• compliance specialists
• operational support roles

 

The leadership team expected the Netherlands team to grow to around 20 employees within 18 months.

 

Initially, the plan was simple.

 

Set up a Dutch entity and begin hiring.

 

But once the finance and legal teams reviewed the operational implications, the decision became less straightforward.

 

The Entity Setup Reality

 

Establishing a Dutch entity would require:

 

• corporate registration
• accounting infrastructure
• payroll setup
• tax reporting frameworks
• governance oversight

 

None of these were unusual.

 

But they introduced operational overhead while the company was still learning how its European expansion would unfold.

 

Leadership began asking a different question:

 

What if the team could start hiring without locking in the entire entity structure immediately?

 

The Alternative Approach

 

Instead of establishing an entity immediately, the company hired through an Employer of Record in the Netherlands.

 

This allowed them to:

 

• onboard employees quickly
• maintain payroll compliance
• avoid immediate entity setup
• adjust hiring plans as the team evolved

 

Within the first year, the Netherlands team grew to 12 employees.

 

Engineering hiring accelerated faster than expected.

 

Sales hiring moved more slowly.

 

Because the company had not yet created an entity, leadership retained the flexibility to adjust the roadmap without restructuring the organization.

 

What Happened Next

 

By the time the team reached 18 employees, the company had far greater clarity about its European operations.

 

At this point, the leadership team began planning the transition to a local entity.

Now the decision was no longer theoretical.

 

The company had:

 

• a stable hiring roadmap
• a defined operational structure
• an internal finance team capable of managing payroll compliance

Entity setup now made sense.

But importantly, it happened at the right time.

 

The Lesson

 

Many companies assume entity setup should happen immediately when entering a new market.

 

But expansion rarely follows a perfectly predictable path.

 

Hiring timelines change.

 

Product priorities evolve.

 

Markets behave differently than expected.

 

Using an Employer of Record during early expansion can provide the flexibility needed to navigate these uncertainties.

 

Once the organization reaches structural stability, establishing a local entity becomes a natural next step.

 

Final Thought

 

There is no universal rule for when a company should establish a local entity.

 

What matters is aligning the structure with the stage of expansion.

 

Move too early, and operational overhead increases unnecessarily.

 

Move too late, and cost optimization opportunities may be missed.

 

But when the timing is right, the transition becomes straightforward.

 

Evaluating Your Expansion Structure

 

If your company is expanding into the Netherlands and evaluating whether to use an Employer of Record or establish an entity, it can be helpful to review the structure early.

 

We regularly help companies assess:

 

• EOR vs entity timing
• payroll governance models
• cross-border hiring structures

 

Sometimes a short review clarifies decisions that otherwise take months to resolve.

 

Get in touch with us:

 

Netherlands (HQ) : +31 97010207974

 

UK (HQ) : +44 7401131349

 

Belgium : +32 460254634

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