An expatriate is an employee sent by their employer from a home country to work in a host country, typically retaining their home-country employment contract and receiving an assignment package that may include cost-of-living allowances, housing, schooling, and tax protection. A local hire is someone who is recruited directly into a host-country entity and employed on the local terms and conditions that apply to domestic employees, without any mobility package overlay.
The distinction has significant consequences for compensation design, tax withholding, and employer cost. Expatriates generally receive richer packages and require shadow payroll, A1 certificates, and assignment letters; local hires require only standard onboarding and host-country payroll registration. The 30% ruling in the Netherlands is available to incoming highly skilled workers regardless of whether they are on expatriate terms or locally hired, provided they meet the salary threshold and distance criterion.
A third category, the TCN local hire, describes a third-country national recruited on local terms into a host-country entity without the backing of a sending employer. This structure reduces mobility costs but may limit the employee's ability to accumulate home-country pension or social-security entitlements. Companies should document the chosen category clearly at the time of hire to avoid disputes over entitlements and to ensure correct tax and immigration treatment throughout the employment.