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30% Ruling & Hiring in the Netherlands: Employer’s 2026 Compliance Guide
Summary:
- In 2026 the 30% ruling rate stays at 30%; it drops to a flat 27% from 1 January 2027 (rulings that started before 1 January 2024 keep 30% for their full five years).
- The 2026 qualifying salary norm is €48,013 (or €36,497 for under-30s with a qualifying Master’s), and the benefit is capped at the €262,000 WNT norm.
- Holiday allowance of 8% of gross is mandatory, and employers must continue paying sick employees for up to two years — a major, often-underestimated obligation.
- You can hire without a Dutch entity by registering as a non-resident withholding agent or using an EOR, but a home-based employee can create a permanent establishment.
Quick answer: In 2026 the Dutch 30% ruling still allows up to 30% of an eligible incoming employee’s salary to be paid tax-free, with a qualifying salary norm of €48,013 (€36,497 for under-30s with a Master’s) and a €262,000 cap; the rate becomes a flat 27% from 2027. Employers also owe a mandatory 8% holiday allowance and up to two years of sick pay. You don’t strictly need a Dutch entity — you can register as a foreign withholding agent or use an Employer of Record — but watch permanent-establishment risk.
The 30% ruling in 2026 — what actually applies
The 30% ruling (30%-regeling) lets a Dutch employer pay an eligible incoming skilled migrant up to 30% of salary as a tax-free reimbursement for relocation (“extraterritorial”) costs, without itemising expenses. It requires prior approval from the Belastingdienst, scarce/specific expertise, and that the employee lived more than 150 km from the Dutch border before being hired.
The recent reform caused confusion, so to be precise about 2026:
- Rate in 2026: 30%. The originally legislated “30/20/10” step-down was scrapped.
- From 1 January 2027: a flat 27% for the remaining term. Rulings that started before 1 January 2024 are grandfathered at 30% for their full five years.
- 2026 salary norm: taxable salary must exceed €48,013, or €36,497 for employees under 30 with a qualifying Master’s degree.
- Cap: the benefit applies only up to the WNT “Balkenende” norm of €262,000 (the transitional exemption from this cap ended on 31 December 2025).
- Duration: five years maximum. The “partial non-resident taxpayer” status was abolished from 1 January 2025.
Because the transitional cohorts are fiddly, confirm an individual employee’s exact entitlement with a tax adviser before relying on it.
Dutch payroll taxes and employer cost
Dutch wage withholdings (loonheffingen) bundle wage tax and national insurance into the Box 1 brackets — for 2026, roughly 35.7% on income up to €38,883, 37.56% up to €78,426, and 49.5% above that. National insurance (AOW, Anw, Wlz) is formally an employee contribution withheld by the employer, not an employer add-on.
The genuine employer-borne costs are the employee-insurance premiums on wages up to €79,409: the AWf unemployment fund (2.74% low / 7.74% high for flexible contracts), the Aof disability premium (6.27% small / 7.63% larger employers), the employer-specific Whk premium, a 0.50% childcare surcharge, and the 6.10% Zvw healthcare levy. In practice this adds roughly 18–27% on top of gross, depending on contract type and the employer’s size and sector classification.
Holiday allowance and leave
By law every employee receives a holiday allowance of at least 8% of gross annual salary, usually paid in May or June. Statutory paid leave is four times the weekly working hours per year — 20 days for a full-time five-day employee — with many collective agreements granting more.
The two-year sick-pay obligation
This is the obligation foreign employers most often underestimate: if a Dutch employee is ill long-term, the employer must continue paying at least 70% of salary for up to two years (104 weeks), and many collective agreements require 100% in the first year. The employer also has statutory re-integration duties (Wet Verbetering Poortwachter) and generally cannot dismiss the employee during this period.
Other key terms
- Minimum wage 2026: €14.71 gross/hour (21+) from 1 January, reviewed again on 1 July.
- Probation: none for contracts of six months or less; max one month up to two years; max two months for two-year/permanent contracts.
- Chain rule: fixed-term contracts become permanent after three consecutive contracts or 36 months, whichever comes first.
- Transition payment: due on most employer-initiated terminations from day one — one-third of a month’s salary per year of service, capped at €102,000 or one year’s salary (2026).
- Dismissal generally needs prior approval from the UWV or a subdistrict court; at-will termination does not exist.
Do you need a Dutch entity?
No – a foreign company can register as a non-resident withholding agent and run Dutch payroll without incorporating or use an Employer of Record in the Netherlands. The catch is permanent-establishment risk: an employee working from the Netherlands, particularly one who can conclude contracts, can create a taxable presence for the foreign company. An EOR is the legal Dutch employer of record, runs loonheffingen, and shields you from that exposure. If you already have an entity, our Netherlands payroll service handles the monthly run, holiday allowance and sick-pay administration. Get in touch to compare options.
Frequently asked questions
What is the 30% ruling and what rate applies in 2026?
The 30% ruling lets Dutch employers pay eligible incoming skilled migrants up to 30% of salary tax-free to cover relocation costs. In 2026 the rate remains 30%; from 1 January 2027 it drops to a flat 27% for the remaining term, though employees whose ruling began before 1 January 2024 keep 30% for their full five years.
What salary must an employee earn to qualify for the 30% ruling in 2026?
The taxable salary must exceed €48,013 in 2026, or €36,497 for employees under 30 who hold a qualifying Master’s degree. The benefit is also capped at the WNT Balkenende norm of €262,000.
Does a foreign company need a Dutch entity to hire someone in the Netherlands?
No — a foreign company can register as a non-resident withholding agent and run Dutch payroll without a local entity, or use an Employer of Record. However, an employee working from the Netherlands can create a permanent establishment with Dutch corporate-tax exposure, which is why many companies use an EOR.
How much do employer payroll costs add on top of gross salary?
Employer-borne contributions (AWf unemployment, Aof disability, Whk, the childcare surcharge and the 6.10% Zvw health levy) typically add roughly 18–27% on top of gross, depending on contract type and the employer’s size and sector classification. The mandatory 8% holiday allowance is part of total compensation on top of that.
Is holiday allowance mandatory, and how many vacation days must I give?
Yes – by law every employee receives a holiday allowance of at least 8% of gross annual salary, usually paid in May or June. Statutory paid leave is four times the weekly working hours per year, i.e. 20 days for a full-time five-day employee, with many employers granting more.
What happens if my Dutch employee is sick long-term?
The employer must continue paying at least 70% of salary for up to two years (104 weeks) of illness, and many collective agreements require 100% in the first year. The employer also has statutory re-integration duties and generally cannot dismiss the employee during this period.
Do I owe severance if I end a Dutch employment contract?
Yes – the statutory transition payment is due on most employer-initiated terminations from the first day of employment, at one-third of a month’s salary per year of service, capped in 2026 at €102,000 or one gross annual salary, whichever is higher. Dismissal also generally requires prior approval from the UWV or a subdistrict court.
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Mark is the Global Sales Director at Topsource Worldwide. He has been a pioneering figure in the global expansion space since 2013. He is the first salesperson to sell EOR services in Europe, a feat he accomplished in 2013.