The expat scheme for foreign employees in the Netherlands
Are you an employer in the Netherlands? And do you hire employees from abroad with a speific expertise to come and work for you in the Netherlands? Then you may be able to use the expat scheme. This was formerly known as the 30% ruling. The expat scheme is a tax advantage. It compensates for costs the expat has when moving to the Netherlands. This article explains how it works.
What is the expat scheme?
Do you hire skilled employees who move to the Netherlands to work for you? These employees may have so-called extraterritorial costs. For example, costs related to moving to the Netherlands. But also the costs of living, which may be higher than in their home country. Find out about possible extraterritorial costs on the Netherlands Tax Administration website.
With the expat scheme, you can compensate your employees for these costs over a maximum period of 5 years. There are 2 ways to do this:
- You can pay a percentage of their salary tax-free.
- Your employee can claim the extraterritorial costs they have made as work expenses. You can then reimburse them fully.
Please note: the expat scheme can also be used by employees posted from the Netherlands to other countries, but only in very limited circumstances. The conditions for this are explained in the Tax Administration's Handboek Loonheffingen, chapter 19.4.2 (PDF, in Dutch).
What are the conditions to use the expat scheme?
For your foreign employee to qualify for the expat scheme, the following criteria must be met:
- The employee is in salaried employment with your company.
- The employee must have specific expertise that is scarce in the Dutch labour market. In some cases, the expertise must even be unique. Read about the expertise requirement on belastingdienst.nl.
- Your employee must earn a certain minimum wage which reflects their expertise. This is called the toetsloon in Dutch. To see a table showing the minimum salary, click the question ‘when do I have a specific expertise’ on belastingdienst.nl.
- If your employee earns a lower wage, the tax‑free allowance must be reduced so that their taxable salary still meets the income standard.
- Employees who conduct scientific research in a designated research facility, or doctors training to be a specialist, do not need to meet this income criterion.
- Besides annual indexation, there will be an additional increase to the minimum salary from 1 January 2027. This change applies to employees who started using the expat scheme on or after 1 January 2024.
- The employee must be recruited from abroad or transferred within a multinational company to work in the Netherlands. The employee must have lived more than 150 kilometres away from the Dutch borders for more than 16 months of the 24 months before starting their first working day in the Netherlands.
- You have applied to the Tax Administration, and have received a decision (beschikking) which states that you may use the expat scheme facility.
Read all the criteria in the Tax Administration's Handboek Loonheffingen, chapter 19.4.1 (wage tax manual, in Dutch).
Please note: the expat scheme is different from the highly skilled migrant scheme. The expat scheme is a tax benefit. The highly skilled migrant scheme is a residence permit from the Immigration and Naturalisation Service (IND).
The choice to reimburse the costs or pay a tax-free percentage
As the employer of skilled employees from abroad, you can choose between reimbursing the actual extraterritorial costs tax-free, or applying for the tax-free payment over a percentage of your employee’s wages. As the employer you must choose this during the first payroll period of each year. And you must do so again for each year after, until the 5-year period is finished.
Please note: If you reimburse the costs, they must be reasonable and plausible. You enter the costs and reimbursement for each employee in your payroll records.
Ongoing changes to the expat scheme
Did your employee start using the expat scheme before 1 January 2024? Then they fall under the old rules. You can choose to pay them 30% of their salary tax-free, or reimburse them, for the full 5 years.
Did your employee become eligible for the expat scheme after 1 January 2024? Then the following changes apply:
As of 1 January 2027, the maximum reimbursement will be reduced from 30% to 27%. Employers can pay eligible employees a maximum of 27% of their wages tax-free.
You may only apply the tax deduction over a maximum amount. The so-called maximum remuneration (Balkenende-norm in Dutch) is set out in the Standard for Remuneration Act (Wet Normering Topinkomens, in Dutch). The maximum salary amount is set every year.
Since 1 January 2025, foreign employees who use the expat scheme can no longer apply for the so-called partial foreign tax liability (partiële buitenlandse belastingplicht) in their income tax return. Before 2025, they were seen as a foreign taxpayer, even though they lived and worked in the Netherlands, for their taxable income from substantial interest (Box 2) and from savings and investments (Box 3). This means they did not have to pay taxes in Box 2 and Box 3 on foreign capital income.
Since 1 January 2025, they have to file their taxable income from substantial interest, as well as their savings and investments in the Netherlands.
Get approval from the Tax Administration
To apply for the expat scheme on behalf of a foreign employee, you first need approval from the Tax Administration. This is called a beschikking in Dutch. You must file the request for approval within 4 months after the first workday of your employee. You will receive the outcome within 8 weeks. You can find the application form on the website of the Tax Administration.
The application should include supporting documents such as employment contracts and proof of qualifications. The application form indicates which documentation must be included.
The expiry date of the expat scheme is stated in the decision.
Does the employer change?
You cannot automatically transfer the expat scheme from one employer to another. Did your employee’s previous employer in the Netherlands make use of the expat scheme? And has that decision not yet expired? Then you and the employee can submit a new request to the Tax Administration together.
If your company is taken over by another business, your employees using the expat scheme will keep the arrangement when transferring to the new company.
Change of position within the same company
In some cases, changing jobs within the same company does not mean there has to be a new application for the expat scheme. To check this, contact the Tax Information Line.
Stay informed
Since 2012, there have been several changes to the original 30% ruling. For example, the scheme's maximum duration was reduced from 10 to 5 years. And in the coming years, more changes are planned. Not only will the compensation be reduced from 30% to 27%, there will be changes to the maximum remuneration and minimum salary standards. Any future changes may also affect your employee during their ongoing 5-year period. Consult with a tax adviser or specialist to stay up-to-date.