The Dutch expat scheme in 2027: New salary thresholds & what changes for employees

From 2027, salary thresholds will rise, the maximum tax-free allowance will drop to 27% for some employees, and the transitional arrangements for partial non-resident taxpayer status will end. In this blog, we’ll explain these changes and whether transitional arrangements may apply. We also outline some practical steps you can take as an employer to prepare.

New salary thresholds for 2027

The salary threshold is a major condition of the expat scheme. It relates to the taxable salary an employee must earn, both to qualify for the scheme and to remain eligible. Monitoring the new thresholds in advance helps you with recruitment decisions and identifying existing employees who may be at risk of losing their entitlement.

From 2027, the salary thresholds will increase beyond the regular annual adjustment for inflation. Employees who were already using the expat scheme in 2024 may qualify for transitional arrangements. For them, only the annual adjustment will apply; the additional increase won’t.

This results in two sets of applicable salary thresholds in 2027:

* The figures for 2027 are indicative and based on provisional data. The final amounts may differ.

The reduced threshold applies to employees under 30 with a Dutch university master’s degree or an equivalent foreign degree. Certain groups, such as scientific researchers, are not subject to a salary threshold.

From 30% to 27%

The maximum tax-free reimbursement of the expat ruling will also change. From 1 January 2027, the expat allowance will be capped at 27% of the original taxable wage. Employees who qualify for transitional arrangements can continue to receive a tax-free allowance of up to 30%, for the remaining duration of their scheme.

There is a distinction though: the transitional arrangement for the maximum percentage has a different eligibility cut-off date from those for the salary thresholds. An employee who can continue to use the lower salary threshold will not automatically retain the maximum tax-free percentage of 30%:

To retain the 30% tax-free percentage, the expat ruling must have been applied by the final payroll period of 2023 and continued without interruption. For the lower salary threshold, the cut-off is the final payroll period of 2024. In both cases, the ruling must still be valid, and the employee must continue to meet the other conditions.

Changing employers does not necessarily mean that eligibility for the transitional arrangement is lost. Continuation will generally be possible if a new employment contract is concluded within three months and the employer and employee jointly apply to continue the scheme. To determine whether an employee can make use of transitional arrangements, you should therefore check whether the employee used the scheme with previous employers. The starting date of the most recent expat ruling does not always tell the whole story.

Abolition of partial non-resident taxpayer status

Alongside the changes to payroll, there is another development that could have a significant impact on employees: the end of partial non-resident taxpayer status. This status allowed employees living in the Netherlands with a valid expat ruling to be treated as non-resident taxpayers for Box 2 (income from substantial shareholding) and Box 3 (income from savings and investments).

This option was abolished on 1 January 2025. Employees for whom the expat scheme was applied in the final payroll period of 2023 may still benefit from transitional arrangements until the end of 2026, subject to certain conditions. From 1 January 2027, the option will end for them too, even if they can still apply the expat scheme to their salary.

From 2027, all employees living in the Netherlands who benefit from the expat scheme will therefore be subject to Dutch taxation on their worldwide assets as well as income from substantial shareholdings in foreign companies. Of course, tax treaties and double taxation relief provisions remain applicable.

A heads-up from you as an employer can be helpful here. Inform employees that they should record the value of their assets and debts as at 1 January 2027. These may include Dutch and foreign bank accounts, investments, a second home, related debts and, in some cases, foreign pension arrangements. Recording balances and valuations at the right time will save considerable inconveniences or stress when preparing their tax returns after the end of the year.

Employees with a substantial shareholding in a foreign company need particular attention. If their partial non-resident taxpayer status ends on 1 January 2027, or earlier, the ‘acquisition cost’ of the shares for Dutch tax purposes is generally set at its fair market value on that date. The acquisition costs will serve as a basis for determining taxable income on a subsequent sale of the share or migration. Arranging a decent valuation and retaining the supporting documentation in advance will avoid later discussions with the tax office.

What you can do

The impact will differ from one employee to another. Before processing the first payroll of 2027, assess which changes affect each employee. The following points will help you prepare.

Who qualifies for which transitional arrangements?

Identify the salary threshold and percentage that will apply to each employee from 2027. Pay particular attention to employees who also used the expat scheme with a previous employer. The start date of their current ruling is not necessarily the date they first benefited from the scheme.

What will your employees notice?

Inform employees who risk losing their entitlement to the expat scheme because of the increased salary thresholds, or who can expect a substantial drop in take-home pay. Discuss in advance whether a salary adjustment could help. Also explain what the reduction from 30% to 27% means for them.

What does this mean for your employment costs?

For employees with a guaranteed net salary, the changes can increase their wage expenses. Calculate the impact in advance so you can account for it in your budgets. Review your salary structure as well, incorporating the different thresholds and percentages into salary offers and employment terms.

What information are candidates receiving now?

Take a critical look at the information recruitment and HR currently share with candidates. Have job postings, offer letters and net salary calculations been updated for 2027? It would be unfortunate if someone decided to move to the Netherlands partly because of the expat scheme, only to find that they do not meet the conditions just after they’ve started.

Do employees understand the implications for their assets?

The abolishment of the partial non-resident taxpayer status will not show up on a payslip. That makes it easy to overlook, even though the financial consequences for your employees can be significant. Explain which information employees need to record as at 1 January 2027. Advise those with a substantial shareholding in a foreign company to contact an adviser before the end of the year to arrange a valuation.

Would you like to know more?

Need help to determijne which employees qualify for the transitional arrangements? Or would you like to know what the changes mean for their take-home pay and your employment costs?

We can help you assess the transitional arrangements, calculate the impact and review individual cases. We can also advise on changes to employment terms, the information you provide to candidates and employees, and preparations for the Box 2 and Box 3 consequences, including valuations of substantial shareholding in foreign companies.

Feel free to contact us through the contact form or your usual CROP contact. Together, we can work out how best to prepare your organisation for 2027.