Expatriates taking up employment in the Netherlands will be subject to comprehensive rules. The Global Mobility Services team at Grant Thornton Netherlands can assist expatriates and their employers in dealing with Dutch visa and work permit requirements, tax matters, social security issues, pension and labour law.
In particular, the Global Mobility Services can assist expatriates and their employers in identifying Dutch tax planning opportunities and can assist with their global tax compliance.
Links to publications: https://www.grantthornton.nl/en/service/human-capital-services/global-mobility-services/
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Non-EU nationals typically need to apply for a residence and work permit before starting employment in the Netherlands. Additionally, it is essential to structure the expatriate's employment contract and benefit package in a tax-efficient manner prior to the assignment's commencement.
For individual taxpayers, the Dutch tax year is equal to the calendar year.
In the Netherlands, there are various tax forms (C/M/P) for individuals, with the specific form depending on the individual's personal situation.
The tax year-end is 31 December. Personal income tax filing should be completed before 1 May of the year following the tax year. However, an extension of the deadline by up to one year is possible when certain conditions are met.
Taxable Income (€)
Please keep in mind that additional social security contributions are to be paid.
The taxation of individuals in the Netherlands is based on residency for income tax purposes. Residents of the Netherlands are subject to tax on their worldwide income. Non-residents are only taxed for certain types of Dutch sourced income, primarily including employment carried out in the Netherlands and real estate located in the country.
Whether an individual can be considered a resident for Dutch tax purposes depends on various facts and circumstances. Important criteria include the location of a permanent home, the individual's intention, registration in a municipal register, and the individual's economic and social ties with the Netherlands.
Wages earned while working in the Netherlands are generally subject to Dutch wage withholding tax. The wage tax rates are similar to the Dutch income tax rates, and the wage tax can be credited against Dutch income tax. Dutch wage withholding tax applies to all forms of income from employment, including weekly/monthly wages, annual salaries, bonuses, commissions, director’s fees, non-approved pensions, and any other cash earnings or benefits in kind. In principle, a foreign employer is not obliged to withhold tax on wages unless they have a so-called (deemed) permanent establishment in the Netherlands. A foreign employer may also voluntarily apply to act as a Dutch wage withholding tax agent.
As from January 1, 2023, there have been changes regarding the taxation of employee stock options. Under the new regime, the starting point is that the benefit from employee stock option plans is taxed on the date that the shares, received when exercising the stock options, become tradeable. However, employees may instead choose/opt to be taxed on the date the option is exercised, which was the taxable moment up to and including 2022.
Stock options granted during the employment in the Netherlands and exercised after leaving the Netherlands can still be considered Dutch taxable wages.
A stock appreciation right (SAR) is essentially a cash bonus which in general is subject to taxation at the moment of pay-out.
In case an employee is granted or eligible to purchase company shares, this may also lead to taxable salary.
With regard to equity-based compensation, we recommend reviewing the terms and conditions of the plan prior to the introduction to determine the taxable moment and/or taxable treatment.
Any remuneration received for labor performed in the Netherlands is considered Dutch sourced income and is consequently subject to Dutch income tax, irrespective of the expatriate's tax residence status (subject to the relevant double taxation treaty).
Most benefits in kind provided by an employer will be subject to Dutch wage or income tax. For example, the usage of a company car is considered taxable income in the Netherlands (except if driven exclusively for business purposes).
The Dutch 30%-ruling is a special tax facility for expatriates that are recruited from abroad to work in the Netherlands. Under this ruling, a maximum of 30% of the gross taxable wage can be paid out on a tax-free basis to cover so-called extraterritorial or ET-costs (additional costs incurred due to working outside of the country of origin).
As from January 1, 2024, an employer can reimburse a maximum of 30 percent of the employee's income tax-free, up to the "WNT standard" ("Balkenende standard"). Any amount exceeding this standard is subject to the regular tax rate. Based on the 2026 WNT standard (262,000 euros), this tax-free reimbursement amounts to 78,600 euros per year. From 2026, the maximum salary limit will apply to everyone.
Employees who already applied for the scheme on December 31, 2023, may choose to be treated as a partial non-resident taxpayer until the end of 2026. This implies that they would be accountable for Dutch taxable income solely from employment (and/or business profits), home ownership in the Netherlands, and income from a substantial interest in a Dutch company.
An expatriate eligible for the 30% tax ruling as of 2024 no longer has the possibility to choose to be treated as a partial nonresident taxpayer. Employees who start using the 30% ruling from January 1, 2024, will have to declare their worldwide income in the Netherlands starting from 2025. In addition, for the employees, who start using the 30% ruling from January 1, 2024, the percentage of the tax-free allowance will be reduced to 27% per 1 January 2027.
For employees who start using the 30% ruling from January 1, 2025, the percentage of the tax-free allowance will be reduced to 27% per 1 January 2027 and in addition, the salary level to qualify for the 30% ruling will be increased.
The Netherlands has an extensive network of tax treaties with other countries.
Relief to avoid double taxation may be claimed based on tax treaties or unilateral regulations for expatriates who are Dutch tax residents. Residents are entitled to either a tax exemption (with progression) or a tax credit.
In the Netherlands, an employee is not allowed to deduct any business expenses from his taxable income. On the other hand, an employer has numerous possibilities to reimburse business-related costs tax-free. Therefore, the total salary package should be structured carefully.
Contributions to a non-Dutch pension plan borne by the employee are tax-deductible if the pension scheme qualifies for Dutch tax purposes (so-called 'corresponding approval').
The mortgage interest paid by the employee for the main residence can in principle be claimed in the Dutch individual income tax return and deducted from the taxable income. This is also the case, within certain limits and criteria, to charitable and life insurance contributions, as well as medical costs.
Finally, certain levy rebates may be applicable.
There is no capital gains tax in the Netherlands yet. This will likely change as of 2028 as the Box 3 legislation is expected to change significantly.
If you own a principle residence, you must add an amount to your taxable income in your Dutch individual income tax return: the owner-occupied home allowance (‘eigenwoningforfait’). However, certain costs, including mortgage interest, are deductible.
If you sell your home, the surplus value (positive or negative) will result in the so-called owner-occupied home reserve. Do you have a positive owner-occupied home reserve? If so, the interest on the purchase of a new home is deductible over a maximum of the purchase price of your new home, minus the owner-occupied home reserve.
A liability to Dutch inheritance and gift tax depends on the individual’s Dutch tax residence and domicile position.
The Dutch tax residency rules determine an individual's liability for taxation on savings and other investment income. The tax rate is 36% effective from January 1, 2024. The tax-exempt asset amount in box 3 is €57,684 (€115,368 for fiscal partners) in 2025.
The basis for savings and investments is a deemed yield basis at the beginning of the calendar year (reference date), to the extent that this deemed yield basis exceeds the tax-exempt amount.
The effective yield percentage is determined by dividing the yield by the yield basis. Specifically, the yield is calculated as 1.44% of the value of bank deposits on the reference date and 5.88% of the value of other assets on the same date, with a reduction of 2.62% of the value of debts. If the calculated yield is negative, it is adjusted to zero.
It is important to note that this taxation system is considered transitional law until approximately 2028, when the new system for taxing income from savings and investments will come into effect. This system is based on actual capital gains.
There are several local taxes such as council charges, asset tax, water board tax and sewage fees.
The municipality levies a real estate (property) tax on owners of immovable property. The amount of tax depends on the value of the immovable property. The percentages may differ per municipality.
Social security contributions include both national insurance contributions and employee insurance contributions.
Social Security 2025 - 'National Insurance Contributions'
Taxable Income(€)
Social Security 2025 - 'Employee Insurance Contributions'
Earnings per year
The maximum premium income for the employee insurance contributions is capped at €75,864 for the year 2025.
Please do note that the employee insurance contributions are based on averages/estimates. The percentages for Whk premiums differ per industry and depend on the total annual fiscal wages of the employee.
There is no wealth tax in the Netherlands.
Work-related expenses scheme (WKR)
The work-related expenses scheme (WKR) is mandatory and allows employers to provide their employees with tax free allowances and/or benefits in kind. For 2025 (the WKR budget) amounts to 2.00% over the first €400,000 of taxable wages and 1.18% of the taxable wages above €400,000. If the allowances and benefits exceed the WKR budget, the excess is considered taxable wages and is taxed at source at a rate of 80%, which is levied at the level of the employer or will be taxed otherwise.
There are several exceptions to this rule and employers and employees also need to meet several conditions when using the WKR budget. For instance, when the employer wants to provide employees with fixed allowances, those allowances need to be substantiated by conducting an investigation of the actual business costs before paying out those fixed allowances.
Noteworthy is that when an assignee working in the Netherlands receives employment income from a non-Dutch employer who does not have a Dutch wage tax withholding obligation, the employee may apply the WKR budget in the Dutch individual income tax return. However, any (fixed) allowances or benefits in kind received, should be treated as taxable income in such a case.
Stock Option Planning
Dutch stock option legislation has changed frequently the last years. Under the current legislation, the starting point is that the benefit from employee stock option plans is taxed on the date that the shares, received when exercising the stock options, become tradeable. However, employees may instead choose/opt to be taxed on the date the option is exercised, which was the taxable moment up to and including 2022.
The tax approach of the Netherlands regarding cross-border stock option taxation is in line with the official OECD commentary, which means an allocation of the stock option benefits may be applicable.
Compensation package structuring
Tax planning and structuring of the remuneration package in a tax-efficient way is possible.
Earnings description
Exemption from Netherlands’ Social Security
Apart from the EU regulation on social security, the Netherlands has concluded an extensive network of social security treaties with other countries. Based on these regulations and treaties, a foreign employee working in the Netherlands who has a Certificate of Coverage or an A1 (EU) may be exempt from making contributions to the Netherlands’ social security scheme. Careful planning is required.
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