Netherlands

Employment relationship

The Dutch Supreme Court ruled that all the circumstances of the case must be looked at to determine whether an agreement should be considered an employment contract. If one or more conditions for an employment relationship (i.e. work, salary, authority) are specifically breached in some respects, this is in itself not sufficient to exclude an employment relationship. As of 2025, the Dutch tax authorities are checking again more strictly whether an employment relationship exists; however in 2025 and 2026 no absence penalty will be levied. As of 2026 penalties for intent or gross negligence will be levied. In July 2026, a new law will be implemented to clarify if an employment relationship exists. 

Expat ruling changes: Cap and scale back

As of 1 January 2024, the 30% ruling (expat facility) can be applied to a maximum of the standard under the Standards for Remuneration Act (WNT-norm) (2026: 262,000 euros). For expats who were already using the 30% ruling in 2022, the transition law end as of 1 January 2026. 

Furthermore, the 30% ruling is scaled back to 27% as of 2027 for the total duration of the expat ruling. A transitional law will apply to employees who have already applied the expat ruling in 2024.

Lastly, the partial non-resident status has been abolished as of 2025. This means that qualifying expats can no longer choose for non-resident taxation for income in box 2 and box 3. Only for expats that already have applied the 30% ruling in 2023 there is a possibility to use the partial non-resident status in 2026 for the last year.

Curtailment of the expatriate cost reimbursement regime

The extraterritorial costs regime (ETK regime) will be curtailed. As of 2026, expenses related to cost of living, such as gas, water, electricity, and private calls to the home country, can no longer be reimbursed tax-free. This amendment is intended to ensure that only reimbursements directly related to the employment relationship remain eligible for the regime.

Increase in tax burden on lucrative interest

As of 2028, a multiplication factor will be introduced for Box 2 income derived from indirectly held lucrative interests. As a result, the effective tax burden in Box 2 will increase from 24.5 per cent to 28.45 per cent in the first tax bracket, and from 31 per cent to 36 per cent in the second tax bracket. However, there are lots of discussions about this measure, so there might be changes before the measure becomes effective. 

Adjustments to box 3 

While the government is still working on a new box 3 system, which will be implemented as of 1 January 2028 at the earliest, a transitional system has been introduced for the years 2023-2027. This transitional system considers the actual asset mix of a taxpayer and divides these assets into three categories: (i) bank deposits (savings); (ii) other assets; and (iii) debts. The value under each category on 1 January will be deemed to yield a fixed percentage. The weighted average yield over all categories will be applied to the total assets above a personal exemption of EUR 59,357 (2026) to determine the taxable benefit that will be subject to tax at a flat rate of 36% (2026). However, the Supreme Court ruled that taxation in box 3 must be based at most on the actual return instead of the transitional system. So, it is now up to taxpayers to demonstrate that the actual return achieved is lower than the lump sum calculated.