Accounting
Netherlands Expat Tax Ruling: From 30% to 27%, What Changes in 2027?
Netherlands expat tax ruling 2027: the 30% rule becomes 27% for most. Salary impact, transitional rules, WNT cap and what to do now.
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12 mins
Intro
The Dutch 30% ruling has long been one of the most well-known tax benefits for international employees relocating to the Netherlands. Under this scheme, employers can pay a portion of an employee’s gross salary tax-free as compensation for the extra costs of living and working abroad. In practice, this increases net income for employees while allowing employers to offer more competitive compensation packages.
From 2027, this system will change. The maximum tax-free allowance will be reduced from 30% to 27% for a significant group of employees. At the same time, transitional rules, income caps and stricter salary thresholds will determine how the change applies in practice. For employers, expats and international founders, understanding these changes now is essential for payroll planning, hiring decisions and long-term financial structuring.
What Is the Dutch Expat Tax Ruling and How Does It Work Today?
The expat tax ruling, commonly referred to as the 30% ruling, is a tax facility for employees who move to the Netherlands from abroad and possess skills that are scarce in the Dutch labour market. The scheme allows employers to pay up to 30% of an employee’s gross salary tax-free as compensation for extraterritorial costs, such as relocation, housing and living expenses.
Up to and including 2026, this tax-free allowance can reach a maximum of 30% of the salary, provided all conditions are met. From 2027, this percentage will be reduced to 27% for certain groups. While the official name is increasingly referred to as the expat scheme, the term 30% ruling is still widely used in practice.
How the 30% ruling works in practice
Under the current structure, an employer may allocate up to 30% of the employee’s salary as a tax-free allowance. The remaining 70% is taxed as regular income. For example, with a salary of €100,000, up to €30,000 may be paid tax-free, while €70,000 is subject to payroll tax.
The ruling does not apply automatically. Both employer and employee must meet specific criteria, including salary thresholds, the 150 kilometre rule and the requirement that the employee has specific expertise. The maximum duration of the scheme is five years.
Why the scheme is attractive
The primary benefit is a higher net salary without increasing the gross cost proportionally. This makes the Netherlands more competitive in attracting international talent. For employers, it provides a structured way to offer tax-efficient compensation packages to skilled employees relocating from abroad.
Why Is the 30% Ruling Being Reduced to 27%?
The 30% ruling has been under political pressure for several years. While it is seen as an important tool for attracting international talent, critics argue that it is too generous, particularly in the context of housing shortages and high-income earners.
An earlier proposal aimed to introduce a tapering model of 30%, 20% and 10% over time. This would have gradually reduced the benefit during the duration of the scheme. That proposal was largely abandoned. Instead, the government opted for a simpler adjustment, keeping the structure intact but reducing the percentage to 27% from 2027.
Why the tapering model was dropped
A phased reduction would have introduced uncertainty for both employers and employees. Many expats make long-term financial decisions based on expected net income. A changing percentage each year would make planning more complex.
The 27% model provides more stability while still reducing the overall fiscal cost of the scheme.
Why 27% specifically
The 27% rate represents a compromise between maintaining the full benefit and significantly reducing it. It allows the Netherlands to retain a competitive expat scheme while addressing political concerns about fairness and public spending.
Who Is Affected by the Change and Who Is Protected?
Not all employees will be affected in the same way. The key factor is the start date of the 30% ruling.
Employees who started using the ruling before 1 January 2024 are generally protected under transitional rules and can continue to benefit from the 30% allowance for the remainder of their five-year period. Employees who started from 1 January 2024 onward will move to the 27% scheme from 2027.
Employees who started before 2024
These employees typically retain the 30% allowance for the full duration of their ruling, provided they continue to meet all conditions. This protection is important for long-term financial planning.
Employees who started from 2024
Employees who entered the scheme from 1 January 2024 will still benefit from 30% during 2024, 2025 and 2026. From 2027, their allowance will be reduced to 27%.
New applicants from 2027
New applicants from 2027 will fall directly under the 27% regime and must also meet updated salary requirements.
How Much Less Will You Save Under the 27% Ruling?
The reduction from 30% to 27% may appear small, but the impact becomes noticeable at higher salary levels. The difference is 3% of the taxable salary, which will no longer be tax-free.
The actual net impact depends on individual circumstances, including tax brackets and deductions. The examples below are simplified and assume the additional taxable income is taxed at the highest rate.
Example at €80,000
At a salary of €80,000, the difference between 30% and 27% is €2,400 per year. After tax, this results in roughly €1,188 less net income annually, or about €99 per month.
Example at €120,000
At €120,000, the difference is €3,600 annually. This translates to approximately €1,782 net per year, or around €149 per month.
Example at €200,000
At €200,000, the difference is €6,000 annually. After tax, this is approximately €2,970 net per year, or about €248 per month.
The WNT Income Cap in 2026: What High Earners Must Know
In addition to the percentage reduction, the expat ruling is subject to an income cap based on the Dutch WNT threshold. For 2026, this cap is set at €262,000.
The tax-free allowance can only be applied to income up to this threshold. Any income above this amount is fully taxed without the benefit of the ruling.
Practical implications
For high earners, this means that even under the 30% or 27% scheme, only part of the salary benefits from the tax-free allowance. The remainder is taxed at standard rates.
Why this matters for employers
Employers hiring senior professionals or executives must account for the cap when structuring compensation packages. The effective benefit may be lower than expected at higher income levels.
New Salary Thresholds From 2027: What Employers Need to Know
From 2027, higher minimum salary thresholds will apply to qualify for the expat scheme. This means that some employees who currently qualify may no longer meet the requirements under the updated rules.
For employers, this is particularly relevant for offers being negotiated today for future start dates. Salary levels that seem sufficient now may fall short under the new thresholds.
Impact on hiring pipelines
Candidates close to the threshold may need adjusted compensation to remain eligible. This requires careful planning during recruitment.
Strategic considerations
Employers may need to rethink how they structure international compensation, including relocation packages, bonuses and other benefits.
Timeline of 30% Ruling Changes From 2022 to 2027
The changes to the expat scheme have developed over several years. Understanding the timeline helps clarify which rules apply to different groups.
2022
The 30% ruling was still fully intact, but political discussions around reform intensified.
2023
The proposed tapering model was introduced and debated.
2024
New entrants became subject to future reductions starting in 2027.
2025
Partial non-resident tax status was abolished for new cases.
2026
The WNT income cap became broadly applicable across all users.
2027
The maximum tax-free percentage is reduced to 27% and stricter salary thresholds apply.
What the 27% Change Means for Expats Already in the Netherlands
For expats already living and working in the Netherlands, the impact depends entirely on their individual situation and start date.
Those affected by the reduction should review their financial planning in advance. A lower net income may influence budgeting, housing decisions and long-term savings.
Financial planning adjustments
Even relatively small monthly differences can add up over time. Reviewing expenses and savings plans is advisable.
Mortgage and pension considerations
Changes in net income may affect mortgage affordability and pension contributions, depending on the structure of compensation.
Stay or relocate decisions
For most expats, the change alone will not determine whether they stay or leave. However, it may play a role alongside other factors such as cost of living and career opportunities.
Is the Netherlands Still Competitive for Expat Talent After 2027?
Despite the reduction, the Netherlands remains a strong destination for international talent. Its business environment, infrastructure and access to the EU market continue to be major advantages.
However, competition from other European countries is increasing. If further reductions occur, it could impact the Netherlands’ attractiveness for highly skilled workers.
Comparison with other countries
Each country uses different mechanisms to attract talent. While some offer tax incentives, others rely on lower base tax rates or different support structures.
Impact on knowledge economy
The expat scheme remains an important tool for attracting talent in sectors such as technology, finance and research.
What To Do Now: Practical Steps Before 2027
Preparation is key. Employers and employees should not wait until the changes take effect.
Check your start date
Determine whether you fall under transitional rules or the new regime.
Review salary thresholds
Ensure that compensation meets the updated requirements for eligibility.
Align with payroll
Payroll systems must reflect the new percentages and caps correctly.
Seek professional advice
Given the complexity of the rules, consulting a tax advisor is recommended.
FAQs:
Will everyone move to 27% in 2027?
No. Employees who started before 1 January 2024 are generally protected and may retain the 30% benefit.
How much will I lose?
This depends on your salary, but the reduction is roughly equivalent to 3% of your salary becoming taxable.
Does the income cap still apply?
Yes. The WNT cap continues to limit the portion of salary eligible for the tax-free allowance.
Can directors and BV founders use the scheme?
In some cases, yes, but the rules are more complex and require careful structuring.
How Neno Helps With Expat Tax, Payroll and BV Administration
The shift from 30% to 27% is more than a simple percentage change. It affects payroll, employment contracts, financial planning and compliance. For companies employing international talent or founders operating through a Dutch BV, getting this right is essential.
At Neno, we help Dutch BVs and growing SMEs manage payroll, accounting, VAT and tax in one integrated system. If you work with expats or are an international founder, Neno ensures your compensation structure, payroll setup and compliance are aligned from day one.
Written by
Nick Knuppe
CEO & Founder
