Finance & Banking

Benefits and Implications of the 30% Ruling for Expats

6 min read For Expats in the Netherlands

The Expat Scheme can allow an employer to pay part of an eligible employee's salary tax-free. The maximum is 30% in 2026, subject to salary requirements and a cap. This guide explains the benefits, the transitional rules for Box 2 and Box 3, and the questions to discuss with payroll.

Major Tax Advantage: 30% Tax-Free Reimbursement

In 2026, your employer may pay up to 30% of your salary, including the allowance, tax-free for extraterritorial costs. The amount is agreed with your employer; it is not an automatic entitlement to the full percentage. Your remaining taxable salary must exceed the applicable salary norm. The full-year tax-free allowance is capped at €78,600 in 2026, with a proportionately lower cap for part of a year.

Impact on Income!

Illustrative 2026 calculation: with total annual remuneration of €80,000, a full 30% allowance is €24,000 and taxable salary is €56,000. That exceeds the standard 2026 salary norm of €48,013. A €60,000 package with an €18,000 allowance leaves only €42,000 taxable, so it does not meet that standard norm. A lower allowance or a qualifying reduced-norm exception may change the result.

Partial Non-Resident Tax Status: Transition Ends after 2026

The option was abolished from the 2025 tax year. If you used the Expat Scheme before 2024 and meet the transitional conditions, you may still elect partial non-resident status through the 2026 tax return. The following treatment applies only while you qualify for and elect that transitional status:

  • Box 2 (Substantial Interest) and Box 3 (Savings and Investments): Under partial non-resident status, you are considered a non-resident taxpayer for income from a substantial interest (Box 2) and income from savings and investments (Box 3). This means that any substantial interest income from foreign companies and most foreign assets (e.g., bank accounts, shares, real estate outside the Netherlands) are generally exempt from Dutch tax. This can lead to considerable tax savings on worldwide wealth.
  • Box 1 (Taxable Income from Work and Home): For income from employment and the Dutch main residence, you are still treated as a resident taxpayer and taxed under the normal Dutch rules.

Driving License Conversion Without a Test

One of the most practical benefits for many expats with the 30% ruling is the ability to convert their foreign driving license into a Dutch one without needing to take a driving test. This applies regardless of the country your license was issued in, which is a major convenience compared to the standard rules. You must still meet RDW's other conditions, apply through your municipality and supply the required documents, including a valid tax decision and any required CBR health declaration.

Other Potential Advantages

  • International School Fees: An employer can reimburse qualifying international-school fees tax-free in addition to the Expat Scheme allowance.
  • Separate Decisions: The tax ruling is not a residence or work permit and does not establish your social-security coverage. Check those separately rather than treating them as automatic benefits of the ruling.

Important Implications and Considerations

While the benefits are significant, it's crucial to be aware of potential drawbacks or implications:

Potential Drawbacks

  • Pension: Ask payroll and your pension provider which salary is pensionable under your employment and pension arrangements; do not assume it is automatically reduced by exactly 30%.
  • Mortgage Interest: Deductibility depends on the qualifying home loan and the normal Box 1 conditions, including repayment requirements for new loans. The ruling does not create a rule that only 70% of your mortgage qualifies for interest deduction.
  • Employee Benefits: Ask payroll how the arrangement affects your insured wage and any later WW or sickness benefit. The outcome is not a guaranteed 30% reduction in every case.

Key Considerations

  • Duration Limit: The ruling has a maximum duration of 5 years. After this, your full salary becomes taxable, which can lead to a significant drop in net income.
  • Annual Review: Your eligibility for the ruling (especially the salary norm) is typically reviewed annually.
  • Impact on Spouse's Income: If your spouse also works and you have the 30% ruling, it might impact their tax situation, particularly concerning certain tax credits.

From 2027

The maximum allowance becomes 27% for employees who first used the scheme in 2024 or later. Those who used it by 31 December 2023 retain 30% under transitional rules. Employees who began using it from 1 January 2025 also face a higher salary norm from 2027. Check the applicable year and your first-use date with payroll.

Official Sources

Rules and calculation checked on 27 September 2026:

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