Shadow Payroll in the Netherlands and the 30% Ruling

By Robert Jeffrey, Holdwise B.V., Hoofddorp. Checked against the official sources on 13 November 2026.

What a shadow payroll is

A shadow payroll is a second payroll in the country where the employee works. The employee stays employed by the employer at home, and that employer keeps paying the salary.

The Dutch payroll next to it reports the same salary to the Dutch tax office (Belastingdienst) and calculates the Dutch payroll taxes. The salary itself is paid once, by the payroll at home.

Shadow payroll is a word from practice. Dutch law has one set of rules for every employer that withholds wage tax, and a shadow payroll follows those rules.

Your organisation is and stays the employer. It keeps the employment contract, directs the work and pays the salary.

When employers use a shadow payroll

An employee relocates to the Netherlands and keeps the job with the employer at home. A company, a charity or a university abroad then has one employee who lives here.
An employee comes to the Netherlands on an assignment and stays on the payroll and in the social security system at home.
An employee works for a Dutch client or group company for a period, while the employer abroad keeps paying the salary.

In each case the first question is which country may tax the wage. The second question is who withholds the Dutch wage tax.

Which country may tax the wage

An employee who lives and works in the Netherlands has the Netherlands as home country and as work country. The wage for the work done here is taxed in the Netherlands.

For an employee who is resident in another country and works here for a period, the tax treaty between the two countries sets the rule. Most treaties let the country of work tax the wage earned there.

The home country keeps the right to tax when three conditions are all met (Belastingdienst, December 2025).

The employee is in the Netherlands for 183 days or fewer in the period that the treaty names.
The employer that pays the wage is established outside the Netherlands.
The wage is borne by the employer abroad, outside any permanent establishment in the Netherlands.

The period is a calendar year, a tax year or twelve months in a row, depending on the treaty. Every day in the Netherlands counts, also weekends, holidays and sick days.

Sometimes a Dutch client or group company directs the work and bears the wage cost. The tax office can then treat that company as the employer in substance, and the Netherlands may tax from the first working day.

The tax adviser from our network reads the treaty with your country. You receive in writing which country may tax which part of the wage.

What the employer registers in the Netherlands

The employer. Your organisation registers with the Dutch tax office with the form for a business from abroad (Aanmelding Onderneming buitenland). It receives a payroll tax number (loonheffingennummer).
The withholding. An employer with a fixed place of business in the Netherlands is a withholding agent by law. An employer from abroad outside that situation can choose to register as a withholding agent for its employees here (Wage Tax Act, Article 6). The payroll records are then kept in the Netherlands.
The employee. The employee has a citizen service number (BSN), and the employer checks the passport or identity card before the first working day.
Social security. The employer asks for the certificate that states in which country the employee is insured.
The expat scheme. Employer and employee send the request to the tax office together.

The registration is due at the latest on the day the employee starts work in the Netherlands. Non-resident employer in the Netherlands sets out the registration step by step.

How the two payrolls work in each period

	Payroll at home	Dutch shadow payroll
Salary	Pays the salary to the employee	Reports the same salary in euros to the Dutch tax office
Tax	Follows the rules of the home country	Calculates the Dutch wage tax, with the expat scheme where it applies
Social security	Pays the contributions at home when the employee stays insured there	Pays the Dutch contributions when the employee is insured in the Netherlands
For the employee	The payslip from home	A Dutch payslip and an annual statement for the Dutch tax return

Each period your organisation sends the salary details from home. The accounting firm from our network turns them into a Dutch payslip, files the payroll return and sends you the amount to pay.

Two points need a decision at the start. The first is who bears the Dutch wage tax, the employee or the employer. The second is how the tax at home and the Dutch tax relate to each other.

The tax adviser sets out both points with your adviser at home, and the employment contract records the choice.

Social security in a shadow payroll

Within the European Union an employee is insured in one country at a time. An employee who is sent to the Netherlands for a limited time can stay insured at home with a certificate of coverage (A1 certificate). The longest period on the certificate is 24 months (Your Europe, checked 30 September 2026).

An employee who lives and works here for an indefinite period is insured in the Netherlands (business.gov.nl, checked December 2025). The shadow payroll then also covers the Dutch employee insurance contributions and the healthcare contribution.

For countries outside the EU, a social security treaty can keep the employee insured at home. The Dutch Social Insurance Bank (Sociale Verzekeringsbank, SVB) lists the treaty countries, among them the United States and the United Kingdom.

The tax adviser checks which country applies and which certificate your organisation asks for.

Shadow payroll and the 30% ruling

The Dutch tax break for staff recruited from abroad is now called the expat scheme (expatregeling). Many people still call it the 30% ruling.

The scheme is applied in a Dutch payroll, by an employer that is a withholding agent for Dutch wage tax (Uitvoeringsbesluit loonbelasting 1965, Article 10e). For an employee who stays on the payroll at home, the shadow payroll is that Dutch payroll.

In 2026 the employer may treat up to 30% of the salary as tax-free. From 1 January 2027 the maximum is 27% (business.gov.nl). Employees who used the scheme before 1 January 2024 keep 30% until their period ends.

These are the main conditions (Belastingdienst, May 2026).

The employer recruits the employee from abroad or sends the employee to the Netherlands.
The employee lived more than 150 kilometres from the Dutch border for more than 16 of the 24 months before the first working day.
The taxable salary is above €48,013 in 2026, or above €36,497 for an employee under 30 with a master’s degree.
The tax office gives a decision, for five years at most.

Employee and employer file the request together. A request filed within four months after the first working day in the Netherlands applies from that first day (business.gov.nl). A later request gives a later start.

Our team prepares the request with you and your employee, and the tax office decides. The 30% ruling calculator shows the effect on pay.

Want our team to have a look?

Who does what

Work	Who does it
Employing the person, paying the salary at home and paying the Dutch payroll taxes	Your organisation, as the employer
The intake, the registration with the Dutch tax office and the contact during the year	Our team
The country that may tax the wage, the permanent establishment question and social security	A tax adviser from our network, with your adviser at home
The Dutch payslips, the payroll return for each period and the annual statement	An accounting firm from our network
The decisions on the registration and the expat scheme	The Dutch tax office

You see the scope and the fee in your proposal before we start.

Intake. You tell us where your organisation is, who works in the Netherlands, from when and under which contract.
Check. The tax adviser checks the tax treaty, the permanent establishment question and the social security position.
Proposal. You receive the scope and the fee, and you decide.
Registration. Our team prepares the registration and the request for the expat scheme.
Each period. You send the salary details from home. The accounting firm files the Dutch return and sends you the amount to pay.

Other payroll situations

Each situation has its own page.

Dutch payroll for foreign employers

The overview of the five situations, what Dutch payroll includes and how our team works.

Non-resident employer

Your company abroad employs someone who lives and works in the Netherlands, and is the employer itself.

From an Employer of Record to your own payroll

Your company takes over the employment contract from the Employer of Record and becomes the employer itself.

Posted workers on a Dutch project

An EU contractor sends its own employees to the Netherlands for installation, assembly or construction work.

Sources

Last reviewed on 13 November 2026.

Frequently asked questions

What is shadow payroll in the Netherlands?

A shadow payroll is a Dutch payroll next to the payroll in the home country. The employee stays employed and paid by the employer at home. The Dutch payroll reports the same salary to the Dutch tax office and settles the Dutch wage tax for each period.

When does an employer abroad need a Dutch shadow payroll?

An employer uses it when an employee works in the Netherlands, stays on the payroll at home and the Netherlands may tax the wage. That is the case for an employee who relocates to the Netherlands. For a shorter assignment, the tax treaty with the home country sets which country may tax.

Our employee relocates to the Netherlands and stays employed by us. What do we register?

Your organisation registers with the Dutch tax office as an employer from abroad and receives a payroll tax number. It can choose to be a withholding agent for Dutch wage tax, with the payroll records kept in the Netherlands. Our team prepares the registration, and a tax adviser from our network first checks the tax and social security position.

Can an employee on a foreign payroll use the 30% ruling?

Yes, through a Dutch payroll. The scheme, now called the expat scheme, is applied by an employer that is a withholding agent for Dutch wage tax. An employer from abroad that registers as a withholding agent and keeps a shadow payroll is such an employer. The maximum is 30% in 2026 and 27% from 1 January 2027, and the tax office decides on the request.

When must we ask for the 30% ruling?

Employee and employer file the request together. A request filed within four months after the first working day in the Netherlands applies from that first day. A later request gives a later start.

Is the wage taxed in two countries?

The tax treaty between the two countries sets which country may tax which part of the wage. The tax adviser from our network reads the treaty and works with your adviser at home on how the tax in each country is taken into account. You receive the outcome in writing.

Do we need a Dutch company for a shadow payroll?

A Dutch company is optional. Your organisation registers with the Dutch tax office as an employer from abroad and files the Dutch payroll return under its own name.

Who is the employer in a shadow payroll?

Your organisation is the employer and stays the employer. It keeps the employment contract, pays the salary at home and pays the Dutch payroll taxes. Our team arranges the registration, and an accounting firm from our network prepares the Dutch payslips and files the returns.

What does a shadow payroll cost?

The fee depends on the number of employees and on the questions the tax adviser answers. You see the scope and the fee in your proposal before we start.