Dutch expat tax scheme (30% ruling): A 2025–2026 overview

The 30% ruling, officially called the expat scheme, is a Dutch tax facility designed to attract highly skilled foreign employees by compensating them for extraterritorial costs—expenses incurred when relocating to and working in the Netherlands. Employers may grant a tax‑free allowance of up to 30% of the employee’s taxable salary, subject to strict conditions.

1. Purpose of the expat scheme

The scheme compensates for additional costs such as higher living expenses, travel, and temporary housing. These costs are recognized by the Dutch government as inherent to international mobility.

2. Eligibility requirements

To qualify, an employee must meet several statutory conditions:

• Employment relationship: The employee must be in paid employment with a Dutch employer.
• Specific expertise: The employee must possess expertise scarce in the Dutch labour market, demonstrated primarily through minimum salary thresholds (toetsloon). For 2026, the minimum annual salary excluding the allowance is €48,013 (lower thresholds apply for employees under 30 with a master’s degree). The minimum salary amount is being indexed annually.
• Recruited from abroad: The employee must have lived more than 150 km from the Dutch border for at least 16 of the 24 months prior to employment.
• Application requirement: Employer and employee must jointly apply to the Dutch Tax Administration.

3. Benefit structure (2024–2026 rules)

Since 1 January 2024, the ruling no longer provides a flat 30% benefit for the full period. Instead, it is phased:

• First 20 months: 30% tax‑free
• Next 20 months: 20% tax‑free
• Final 20 months: 10% tax‑free

Employees who already used the ruling in 2023 retain the full 30% for five years.

The allowance applies only to salary up to the top‑income cap (e.g., €262,000 in 2026, indexed annually).

4. Key changes effective 2025

Several reforms significantly affect expats:

A. Abolition of Box 3 exemption for new applicants

As of 1 January 2025, new applicants no longer benefit from the exemption from Dutch wealth tax (Box 3) on foreign savings and investments.

B. End of partial foreign tax liability option

From 2025, expats can no longer opt for partial non‑resident taxpayer status for Box 2 and Box 3—unless transitional rules apply (generally until 2026).

This change particularly affects expats with foreign investment portfolios, crypto, or substantial shareholdings.

5. Duration of the ruling

The maximum duration remains five years, provided all conditions continue to be met.

6. Practical considerations for employers and employees

• Salary planning: Ensure taxable salary meets the minimum threshold after applying the allowance.
• Wealth tax exposure: New applicants must prepare for Box 3 reporting obligations.
• Mobility planning: The150‑km rule remains a strict barrier for many EU‑based candidates.
• Transitional law: Employees who started before 2024 may retain more favourable treatment.

7. Outlook for 2027 and beyond

The Dutch government has proposed reducing the allowance to 27% for new applicants from 2027, though this is still subject to parliamentary approval.

Contact our team for more information and application process.