Expat benefit schemes in Europe: why the Netherlands must stay competitive
The Netherlands’ Expat Scheme (formerly known as the 30% ruling) is a cornerstone policy designed to attract highly skilled international specialists. Its primary goal is to compensate foreign hires for extraterritorial costs and make Dutch employment offers competitive on a global scale. While the scheme has evolved over the past decades, from informal allowances in the 1960s to the modern codified 30% ruling, it remains one of the most comprehensive packages in Europe.
From January 1, 2027, the scheme will face a reduction from 30% to 27% as part of fiscal savings. This decision has sparked debate because the demand for international talent in the Netherlands remains high. At the same time, other European countries are expanding or enhancing their schemes to attract skilled workers, which could affect the Netherlands’ competitive edge. More European countries use tax and immigration schemes to attract skilled international workers, but they don’t follow the same playbook.
1. Does the Netherlands still need international talent?
Yes, despite policy adjustments aimed at reducing fiscal exposure, demand for skilled professionals remains strong. Sectors like tech, AI, life sciences, engineering, and in general scale-ups are heavily reliant on international hires. The Expat Scheme and the Highly Skilled Migrant permit help fill these gaps. Current policy changes are primarily fiscal rather than demand-driven; the structural need for international talent persists.
Reducing the scheme without complementary measures risks making Dutch offers less competitive, particularly for startups and scale-ups operating on tight budgets.
2. How do schemes in other EU countries look and how are they evolving?
Other European countries actively use tax and immigration policies to attract international talent.
Trend: Most countries are broadening access, lowering thresholds, or providing tax incentives to secure talent, focusing especially on sectors critical to economic growth, technology, and innovation.
Let’s put this into a Gross/ Net perspective. What does this mean on an annual salary per country? The calculation is done with €100,000 salary as an easy reference based on various sources .
*Source note for comparison table: Average rates and calculations are based on PwC, Deloitte, and KPMG expatriate tax calculators (2024–2025 versions), adjusted for country-specific expat regimes. Effective tax rate = total tax burden on employment income, excluding employer contributions.
Observations:
Spain and Finland offer the most favourable flat-tax expat regimes.
The Netherlands remains competitive, but the 2027 reduction from 30% to 27% weakens its appeal relative to peers.
Countries like Denmark and Finland are lowering thresholds or rates, signalling a race for talent competitiveness.
3. Potential risks if the Netherlands shrink the scheme
Reducing the tax-free allowance without additional measures could create several challenges:
Recruitment friction: Startups and scale-ups may face higher hiring costs or lose candidates to countries with more favourable net pay or simplified entry routes.
Geographic rebalancing: Skilled candidates may prefer Spain, Denmark, Ireland, or Germany, which combine lower taxes with fast permits and family reunification.
Longer hiring cycles & higher costs: Employers may need to increase gross salaries, offer bonuses, or non-taxable benefits (housing support, sign-on bonuses), increasing burn rates and affecting investment decisions.
Sectoral vulnerability: Industries critical to national competitiveness, such as tech and life sciences, could face delays or talent shortages.
4. Conclusion & recommendations
As other EU countries expand their expat incentives, the Netherlands must act decisively to preserve its appeal. By aligning tax policy with talent needs and simplifying immigration procedures, Dutch employers and policymakers should aim to sustain the nation’s position as a leading European hub for innovation and skilled professionals.
Key takeaways:
Talent demand remains high: Tech, life sciences, AI, engineering, and scale-up sectors continue to rely heavily on international hires.
Net salary matters: The 30% ruling boosts the net take-home pay for expats; a reduction reduces the attractiveness of Dutch offers relative to other EU countries.
Startups and scale-ups are particularly vulnerable: Loss of the scheme could force higher gross salaries or costly non-taxable benefits, affecting growth and investment.
Solutions to maintain competitiveness:
Targeted fiscal incentives: Introduce sector-specific or regional allowances to protect critical industries.
Streamline immigration: Accelerate work permit processes and family reunification to maintain ease of entry.
Complementary relocation support: Housing, language training, and integration support can offset a reduced tax-free allowance.
Monitor EU peers: Benchmark net compensation and procedural ease to ensure Dutch offers remain attractive compared to other EU countries.
By combining targeted fiscal measures with non-tax incentives and streamlined permits, the Netherlands can retain its edge as a top destination for international talent, even with the upcoming reduction in the Expat Scheme.
Sources
Belastingdienst. 30% facility for highly educated foreign employees (expats). belastingdienst.nl
Government.nl. The Expat Scheme (30% ruling) in the Netherlands. government.nl
PwC Netherlands. Evaluatie van de 30%-regeling. pwc.nl
Rijksoverheid. Ramingstoelichtingen Belastingplan 2025. rijksoverheid.nl
Skat.dk. The Danish tax scheme for foreign researchers and highly-paid employees. skat.dk
Vialto Partners. Finland: Global mobility tax proposed changes. vialtopartners.com
Make It In Germany. Skilled Workers Immigration Act 2024. make-it-in-germany.com
Enterprise Ireland. Critical Skills Employment Permit (CSEP). enterprise.gov.ie
Expatica / Migration and Home Affairs. Belgium highly qualified worker permits. expatica.com
Azets. Global mobility insights 2023. azets.com