Change to partial foreign tax liability
Previously, foreign employees who had been granted the 30% ruling could apply for partial foreign tax liability (partiële buitenlandse belastingplicht) in their income tax return. This was advantageous as they were then seen as a foreign taxpayer for their taxable income from substantial interest (box 2) and from savings and investments (box 3), even though they lived and worked in the Netherlands. They therefore did not have to pay taxes in Box 2 and Box 3 on foreign capital income.
Since 1 January 2025, this is no longer the case.
There is, however, a transitional arrangement for employees hired before 1 January 2024. Employees who had the 30% rule over the last pay period of 2023 are allowed to continue to use the partial foreign tax liability up to and including 2026.
Benefits of the Expat Scheme / 30% ruling
- A tax-free allowance of up to 30% of your salary for a maximum term of 5 years.
This percentage will be reduced to 27% from 1 January 2027 (with some exceptions for those who activated the facility before 2024). - Since 1 January 2024, there is a maximum amount that can be paid.
The maximum remuneration (balkenende-norm) is set each year in the Standard for Remuneration Act (Wet Normering Topinkomens). There is a transitional arrangement for employees hired before 1 January 2023, whereby the maximum limit will only apply to them from 1 January 2026. - An additional tax-free reimbursement from your employer for extraterritorial costs for school fees.
The school must be either an international school or an international department of a regular school, meaning that the education at the (section of the) school is based on a foreign system and the school or department is mainly intended for children of expatriate workers. - Expats who have been granted the 30% ruling can convert their foreign driving license to a Dutch one.
Conditions of the Expat Scheme / 30% facility
- The employee must have an employment contract.
- The employee must have specific expertise that is difficult to find in the Netherlands.
- The employee’s earnings must meet or exceed a specified minimum wage. See belastingdienst.nl for more details. (Employees who conduct scientific research in a designated research facility or doctors training to be a specialist are exempt from this income criterion).
- The employee must have been recruited from outside the Netherlands or transferred within a multinational company to work in the Netherlands.
- The employee must have lived more than 150 kilometers away from the Dutch border for more than 16 out of the previous 24 months before their first working day in the Netherlands.
The Belastingdienst (Dutch Tax Authority) makes the final decision as to whether the Expat Scheme is granted. Each case is specific. The employer is not allowed to apply the benefits of the scheme until the Belastingdienst has officially approved the application.
Application procedure
The employer submits an application form (also signed by the employee) to the Belastingdienst.
This application must be submitted within 4 months after the start of employment in the Netherlands, in order to avoid a reduction on the maximum duration of the 30% tax facility. Approval can take months to come through, so it is important to apply on time.