The Ultimate Netherlands 30 Percent Ruling Guide for Mid-Market Companies

The Netherlands has quietly become one of Europe's most attractive talent hubs, and the 30 percent ruling is a big reason why. This tax benefit allows Dutch employers to pay up to 30% of qualified international employees' salaries tax-free for five years, creating substantial savings that can make or break your ability to compete for scarce talent in Amsterdam, Rotterdam, and beyond.

For mid-market companies scaling across Europe, the ruling represents more than just a tax break. It's a strategic lever that can reduce total employment costs, attract senior hires who might otherwise choose London or Berlin, and provide the financial flexibility to build world-class teams without breaking the budget. But like most European employment benefits, the devil is in the details, and getting it wrong can cost you both money and compliance headaches.

What Is the Dutch 30 Percent Ruling

The Dutch 30 percent ruling is a tax facility that allows employers to compensate international employees for the extra costs of living abroad. Instead of these "extraterritorial costs" being taxed as regular income, up to 30% of an employee's gross salary can be paid as a tax-free allowance.

Think of it as the Dutch government's recognition that relocating to the Netherlands involves real financial costs. Housing deposits, international school fees, higher living expenses, and the general disruption of moving your life across borders all add up. The ruling helps offset these costs while making Dutch employment packages more competitive.

The benefit lasts for a maximum of five years from the employment start date. During this period, only 70% of the employee's salary is subject to Dutch income tax, while the remaining 30% is treated as a tax-free reimbursement for living abroad.

For mid-market companies expanding into the Netherlands, this creates a powerful recruitment advantage. You can offer competitive net salaries without inflating your gross payroll costs, making it easier to attract senior engineers, product managers, and other hard-to-find talent from across Europe and beyond.

The ruling is often called the "expat scheme" by Dutch tax authorities, though it technically applies to any highly skilled international hire who meets the eligibility criteria, regardless of their nationality or previous location.

Eligibility Rules and Minimum Salary for the 30 Ruling Netherlands

Not every international hire qualifies for the 30 percent ruling. Both the employee and employer must meet specific criteria that focus on skills scarcity, distance, and compensation levels.

Distance Requirements

The employee must have lived more than 150 kilometers from the Dutch border for at least 16 of the 24 months before starting their Dutch employment. This rule ensures the benefit targets genuine international recruitment rather than cross-border commuting.

For context, this means employees from London, Paris, Berlin, and most major European cities easily qualify based on distance. However, someone living in Brussels or Düsseldorf might not meet the threshold, depending on their exact location.

Employment Relationship

The employee must be hired by a Dutch employer or Dutch establishment of a foreign company. This typically means being recruited from abroad rather than already working in the Netherlands on a different visa or employment arrangement.

Minimum Salary Thresholds

For 2025, the minimum gross salary is €46,660 per year for most employees. However, employees under 30 with a master's degree can qualify with a lower threshold of €35,468 annually.

These thresholds are indexed annually, so they increase each year to reflect inflation and wage growth. The salary requirement includes base pay, bonuses, and most benefits, giving employers flexibility in how they structure compensation packages.

Scarce Expertise

The employee should possess specific knowledge or experience that's not readily available in the Dutch labor market. In practice, meeting the salary threshold usually satisfies this requirement, as it indicates the role requires specialized skills.

Documentation Requirements

Employers need proof of the employee's previous residence, employment history, qualifications, and the terms of their Dutch employment contract. Maintaining clear documentation is essential for both the initial application and potential future audits.

How the 30 Tax Ruling Netherlands Cuts Expat Tax for Mid-Market Teams

The financial impact of the 30 percent ruling can be substantial, particularly for senior roles where the salary thresholds represent a smaller portion of total compensation.

The Tax Calculation

Under the ruling, 30% of the employee's taxable salary is treated as a tax-free allowance. The remaining 70% is subject to Dutch income tax brackets, which range from 36.93% to 49.5% depending on income level.

For example, consider a software engineer earning €80,000 annually:

• Without the ruling: €80,000 fully taxable
• With the ruling: €56,000 taxable (70% of salary), €24,000 tax-free allowance

This typically results in net pay increases of €6,000 to €12,000 per year, depending on the salary level and tax bracket.

Competitive Advantage

The ruling helps Dutch employers compete with other European tech hubs by improving take-home pay without inflating gross employment costs. This is particularly valuable for mid-market companies that need senior tech talent but can't match the total compensation packages offered by large tech companies.

Team Strategy Impact

For companies building European teams, the ruling can make the difference between attracting your first-choice candidate or settling for a local hire. It's especially powerful for roles that are genuinely scarce in the Dutch market, such as specialized engineers, data scientists, and senior product roles.

The benefit compounds over time. A €10,000 annual tax saving becomes €50,000 over the five-year period, creating real retention value even as the benefit eventually expires.

Application Process for Employers Hiring Dutch Expats

The 30 percent ruling application must be filed within four months of the employee's Dutch employment start date. Missing this deadline typically means losing eligibility entirely, so timing is crucial.

Required Documentation

• Signed employment contract showing salary and job responsibilities
• Proof of the employee's residence history for the 24 months before employment
• Educational qualifications or professional certifications
• Employer registration details with Dutch tax authorities

Filing Process

Applications are submitted through the Dutch Tax Authority's online portal. The process typically takes up to eight weeks, though complex cases or missing documentation can extend this timeline.

Employer Responsibilities

The employer must certify that the role requires specific expertise not readily available in the Dutch labor market. This usually involves describing the job requirements and explaining why international recruitment was necessary.

EOR vs Entity Considerations

If you're using an Employer of Record (EOR) service, they can typically handle the application process on your behalf. However, this requires additional coordination and documentation to ensure all requirements are met correctly.

Companies with their own Dutch entity have more direct control over the process but also bear full responsibility for compliance and accuracy.

Processing and Approval

Once approved, the ruling takes effect from the employment start date, not the approval date. This means employees can benefit from reduced tax withholding even while the application is pending, subject to potential adjustments if the application is denied.

Employer Payroll Taxes and Total Cost Impact Under the 30 Percent Ruling

The 30 percent ruling affects more than just employee income tax. It also impacts employer-side costs and payroll administration in ways that can improve your total cost of employment.

Social Security Contributions

The tax-free allowance portion isn't subject to Dutch social security contributions, reducing employer costs beyond the employee tax savings. This typically saves employers an additional 2-3% of the allowance amount in social charges.

Total Employment Cost Modeling

When budgeting for Dutch hires, factor in:

• Gross salary
• Employer social security contributions (reduced on the 30% portion)
• Administrative costs for setup and ongoing compliance
• Professional fees for application support

Competitive Positioning

The ruling can make Dutch employment packages 15-25% more cost-effective compared to similar roles in Germany or France, where no equivalent benefit exists. This creates real competitive advantage when competing for European talent.

Budget Planning Considerations

Remember that the benefit expires after five years. Build this into your long-term compensation planning, as employees will eventually revert to standard Dutch taxation. Many companies plan salary adjustments or enhanced benefits to offset this change and maintain retention.

Administrative Overhead

While the ruling creates savings, it also requires ongoing compliance monitoring. Employers must track eligibility, maintain documentation, and ensure payroll systems correctly calculate the tax-free allowance each month.

Changes to the Netherlands 30 Percent Ruling and the 30 Ruling Minimum Salary 2025

Recent legislative changes have modified the ruling's structure and eligibility requirements, with more changes planned for the coming years.

Key Changes for 2025

A salary cap of €246,000 has been introduced for 2025, meaning the tax-free allowance only applies to income up to this threshold. For most mid-market hires, this won't be a limiting factor, but it affects senior executive packages.

The minimum salary thresholds have also been updated for 2025:

• General threshold: €46,107 annually
• Under-30 with master's degree: €35,048 annually

Upcoming Changes for 2027

Starting January 1, 2027, the maximum tax-free allowance will be reduced from 30% to 27%. This represents the first reduction in the ruling's percentage since its introduction.

Partial Non-Resident Status Elimination

New applicants from 2025 onward can no longer opt for "partial non-resident taxpayer status," which previously allowed some foreign assets to remain outside Dutch tax scope. This change primarily affects high-net-worth individuals with significant international investments.

Grandfathering Provisions

Employees who received the ruling before 2024 can retain the full 30% benefit and partial non-resident status until the end of 2026, providing some transition protection for existing beneficiaries.

Strategic Planning Implications

These changes don't fundamentally alter the ruling's value for most mid-market hiring, but they do create urgency for companies considering Dutch expansion. The current terms remain attractive, but future reductions may affect long-term talent strategies.

Planning for the End of the 30 Ruling and Retention Options

The five year time limit means every employee who benefits from the ruling will eventually face higher taxes. Smart employers plan for this transition well in advance.

Post-Expiry Tax Impact

When the ruling expires, employees revert to standard Dutch taxation on their full salary. For someone earning €80,000, this typically means an additional €6,000-€8,000 in annual taxes, representing a significant reduction in take-home pay.

Retention Strategies

Companies can offset the tax increase through several approaches:

• Salary adjustments: Gross salary increases to maintain similar net pay
• Enhanced benefits: Additional vacation days, flexible work arrangements, or professional development budgets
• Equity compensation: Stock options or profit-sharing arrangements that provide long-term value
• Career progression: Promotions or expanded responsibilities that justify higher compensation

Timing Your Approach

Begin retention conversations 12-18 months before the ruling expires. This gives you time to budget for changes and allows employees to make informed decisions about their future with your company.

Internal Mobility Options

For companies with multiple European offices, internal transfers can provide career development opportunities while potentially accessing different tax benefits or lower cost of living locations.

Market Benchmarking

Regularly review compensation against local Dutch standards rather than international packages. After five years in the Netherlands, many employees have established roots and may value stability over maximum compensation.

Comparing the Dutch 30 Percent Ruling With Other Europe Expat Tax Reliefs

The Netherlands isn't the only European country offering tax incentives for international talent. Understanding the competitive landscape can inform your location strategy and help you position Dutch opportunities effectively.

France's Impatriate Regime

France offers a partial tax exemption on foreign-source income for up to eight years, but it's more complex and typically benefits higher earners with significant international assets. The Dutch ruling is simpler and more predictable for most mid-market roles.

Portugal's Non-Habitual Resident (NHR) Program

Portugal's NHR program previously offered significant tax advantages, but recent changes have reduced its attractiveness for most employment situations. The Dutch ruling now provides clearer benefits for traditional employment relationships.

Spain's Beckham Law

Spain's special tax regime for expatriates can be attractive for very high earners, but it has strict requirements and doesn't provide the same broad applicability as the Dutch ruling.

Italy's Flat Tax Regime

Italy offers a flat tax option for new residents, but it's primarily designed for individuals with significant foreign income rather than traditional employment situations.

Competitive Assessment

For mid-market companies hiring senior technical talent, the Dutch 30 percent ruling often provides the most straightforward and valuable benefit. It's easier to understand, apply, and communicate to candidates compared to more complex schemes in other countries.

The combination of the ruling with the Netherlands' strong tech ecosystem, English-language business environment, and central European location creates a compelling package for international expansion.

When Mid-Market Companies Should Use an EOR or Own Entity in the Netherlands

The choice between using an Employer of Record (EOR) or establishing your own Dutch entity affects how you access the 30 percent ruling and manage ongoing compliance.

EOR Advantages for the Ruling

Using an EOR can provide faster access to the ruling since established EOR providers already have Dutch entities and payroll systems in place. This can be valuable when you need to hire quickly or are testing market demand with a small team.

EOR providers typically handle the application process, ongoing compliance monitoring, and payroll administration, reducing your internal administrative burden.

Own Entity Benefits

Companies with their own Dutch entity have direct control over the application process and can build internal expertise in Dutch employment law. This can be valuable for larger teams or long-term market commitment.

Direct employment relationships can also strengthen your employer brand and company culture, particularly important for senior hires who value being direct employees rather than EOR arrangements.

Transition Planning

Many mid-market companies start with an EOR for their first few Dutch hires, then establish their own entity as the team grows. The 30 percent ruling can typically transfer when employees move from EOR to direct employment, but this requires careful coordination to maintain eligibility.

Decision Framework

Consider an EOR when:

• You're hiring 1-5 employees initially
• Speed to market is critical
• You want to test demand before committing to entity establishment
• Administrative simplicity is a priority

Consider your own entity when:

• You're planning to hire 10+ employees within 18 months
• Direct control over employment relationships is important
• You have the internal resources for Dutch compliance management
• Long-term market commitment is clear

Many mid-market companies start with an EOR for their first few Dutch hires, then establish their own entity as the team grows.

Teamed can advise on the optimal employment structure for your Dutch expansion, helping you evaluate whether an EOR or owned entity provides the fastest path to securing 30 percent ruling benefits for your team.

Strategic Checklist to Decide If the Netherlands 30 Percent Ruling Fits Your Expansion Plan

Use this framework to evaluate whether Dutch expansion and the 30 percent ruling align with your company's growth strategy and talent needs.

Talent Market Assessment

• Are the skills you need genuinely scarce in your current markets?
• Can you find qualified candidates in Amsterdam, Rotterdam, or other Dutch tech hubs?
• Do salary expectations align with your budget, including the ruling benefits?
• Are candidates interested in relocating to the Netherlands?

Financial Modeling

• Calculate total employment costs with and without the ruling
• Include entity setup costs, ongoing compliance, and administrative overhead
• Model the five-year cost progression as the ruling expires
• Compare against alternative European locations

Market Opportunity

• Is there sufficient revenue potential in the Netherlands to justify local hiring?
• Do you need Dutch market expertise or language capabilities?
• Can remote workers in the Netherlands serve broader European markets effectively?

Operational Readiness

• Do you have the internal resources to manage Dutch employment compliance?
• Can you support employees through the relocation and integration process?
• Is your management team prepared for the complexity of European employment law?

Long-term Strategy

• How does Dutch expansion fit your five-year European growth plan?
• Can you commit to retaining employees beyond the ruling's expiration?
• Do you have plans for career development and internal mobility?

Risk Assessment

• Are you comfortable with the regulatory requirements and ongoing compliance obligations?
• Can you handle potential changes to the ruling's terms or eligibility requirements?
• Do you have contingency plans if key employees leave after the ruling expires?

Teamed's advisors can guide you through this strategic evaluation, providing counsel on how the 30 percent ruling fits within your broader European employment strategy across 180+ countries.

Ready for Clarity? Talk to the Experts at Teamed

The Dutch 30 percent ruling can be a powerful tool for mid-market companies building European teams, but success depends on understanding the details and executing your strategy correctly.

From eligibility requirements and application timing to entity structure decisions and long-term retention planning, there are numerous moving pieces that can impact both your costs and compliance obligations.

When you're evaluating Dutch expansion and the 30 percent ruling's role in your talent strategy, you need advisors who understand both the technical requirements and the strategic implications. Teamed can help you model the true costs, evaluate EOR versus entity timing, and execute your chosen approach with confidence.

Our specialists have guided mid-market companies through complex European employment decisions across 180+ countries. We know how the ruling interacts with different employment structures, how to optimize applications for faster approval, and how to plan for the post-ruling transition that every beneficiary eventually faces.

Whether you're hiring your first Dutch employee or consolidating a fragmented European employment strategy, we can provide the strategic guidance and operational support you need to make informed decisions and execute them effectively.

Talk to the experts at Teamed to explore how the Dutch 30 percent ruling fits your expansion plans and get clarity on the path forward.

Frequently Asked Questions About the Dutch 30 Percent Ruling

Can contractors converted to employees still qualify for the 30 percent ruling?

Yes, contractors who become employees can qualify if they meet the distance and salary requirements and apply within four months of the employment start date. The key is ensuring they were genuinely hired from abroad initially, not just local contractors being converted.

Does the 30 percent ruling cover stock options or variable bonuses?

The allowance applies to gross salary including bonuses and most benefits. Stock options may be taxed differently depending on their structure and vesting schedule, so it's worth consulting with Dutch tax specialists for complex equity arrangements.

Can an EOR submit the 30 percent ruling application instead of a Dutch entity?

Yes, EORs with Dutch entities can apply on clients' behalf, though this requires additional documentation and coordination. The EOR acts as the legal employer for application purposes, but the underlying employment relationship must still meet all eligibility requirements.

How soon after arrival must the 30 percent ruling application be filed?

The application must be filed within four months of the employee's Dutch employment start date, not their physical arrival in the Netherlands. This distinction is important for employees who start working remotely before relocating.

What is mid-market?

Mid-market typically refers to companies with 200-2,000 employees or revenue between £10 million and £1 billion. These companies have outgrown startup-friendly solutions but don't yet need enterprise-scale complexity.or