As the year comes to a close, HR and payroll teams need to ensure that their expat population remains fully compliant with the expat ruling (formerly known as the 30% ruling). From verifying employment contracts and salary thresholds for the past year and the coming year to preparing for upcoming changes in 2027, careful planning now can prevent surprises and ensure smooth year-end processes. Use this checklist to review, adjust, and communicate key items, keeping your organization and expat population ahead of compliance obligations.
For a concise overview of key year-end actions, download our practical expat ruling checklist, designed to support a quick compliance review and 2027 planning.
Verify that the expat ruling clause is explicitly included in employment contracts or documented in an addendum. This is particularly important for retroactive applications, as the contract forms the basis for any retroactive calculation.
Check that any employment contract renewals over the past year continue to include the correct articles, references to legislation, and applicable salary requirements.
Minimum salary requirements are relevant not only when filing the application but for the entire duration of the ruling. If an employee’s salary falls below the required threshold (e.g., due to unpaid leave or part-time arrangements), the expat ruling can be revoked retroactively.
EUR 46,660 for employees aged 30 or older
EUR 35,468 for employees under 30 with a master’s degree
EUR 48,013 for employees aged 30 or older
EUR 36,497 for employees under 30 with a master’s degree
Additionally, there is a maximum salary over which the 30% ruling can be calculated, linked to the so-called Balkenende norm.
2025: Maximum salary EUR 246,000 → maximum tax-free reimbursement EUR 73,800
2026: Maximum salary EUR 262,000 → maximum tax-free reimbursement EUR 78,600
Expats already covered by the expat ruling in December 2022 were not limited by these maximum until December 31, 2025. However, the new maximum will also apply to them starting January 1, 2026.
Review all expat salaries at year-end to ensure compliance for 2025.
Confirm salaries for January 2026 to maintain compliance.
For employees turning 30 in 2025/2026, adjust salaries or percentages to meet the higher threshold from the month after their birthday.
For expats earning EUR 246,000 or more, check that maximum is not exceeded or eligibility for the transitional arrangement.
Notify affected employees in advance if the expat ruling benefits will change in 2026.
Identify expats whose expat ruling will expire in 2026 (typically after 60 months).
Next Steps:
Discuss financial and employment implications with HR and payroll.
Communicate with affected employees to manage expectations.
Explore alternative benefits or compensation to mitigate the loss of the tax advantage.
Employers must ensure the expat ruling is calculated and categorized correctly as final levy component.
Checklist:
Verify correct tax-free allowance calculation (max 30%).
Check extraterritorial cost reimbursements are properly documented.
Confirm expat ruling entries comply with Dutch wage tax rules for Work Related Costs-scheme.
Adjust salaries for employees currently benefiting from the under-30 threshold to meet the standard EUR 48,013 requirement from the first day of the month following their 30th birthday onward.
Ensure new employment contracts include accurate expat ruling provisions.
Factor in 2026 salary thresholds when budgeting for new hires.
Retroactive application of the expat ruling requires careful payroll handling:
Apply the ruling directly in payroll; it cannot be claimed via the income tax return.
Take inventory of pending expat ruling applications at year-end.
Keep payroll open if retroactive corrections are expected.
Avoid applying 2025 corrections in 2026 payroll to prevent exceeding the 30% allowance.
Consider transitional exemptions for existing expat ruling beneficiaries.
Confirm eligibility for international school fee reimbursement. Does the international school meet the requirement?
Ensure proper documentation and tax treatment.
Submit all expat ruling applications for 2025 hires within the 4-month window.
Inform expats about changes in salary thresholds, expiring rulings, or tax implications.
Offer consultations or tax briefings to affected employees.
The expat ruling is set to change in 2027, with a lower tax-free rate, higher salary thresholds, and other adjustments. Early planning ensures compliance and helps manage employee expectations.
Reduction of tax-free allowance: from 30% → 27% of salary.
Higher minimum salary thresholds to qualify for the ruling (expect a 9 -10% increase).
Application rules for different start dates: transitional rules for employees already under the ruling.
Terminology shift: the regime may increasingly be referred to as the expat ruling.
Review all expat salaries and employment contracts to check eligibility under the new 2027 thresholds.
Forecast payroll budgets considering the 27% rate and higher minimum salaries.
Identify employees who may lose part of their tax advantage and plan communications in advance.
Align recruitment and retention strategies with the upcoming changes.
Schedule internal planning sessions to update payroll and compliance processes for 2027.
By taking these steps now, your organization can stay ahead of compliance risks and prepare employees for the upcoming changes.
From 1 January 2025, expats who benefit from the expat ruling can no longer elect partial foreign tax liability (partiële buitenlandse belastingplicht) in their Dutch income tax return. This means:
They must report their worldwide assets in the Netherlands for Box 2 (substantial interest) and Box 3 (savings and investments), including foreign bank accounts, property, investments and similar holdings.
If the expat has 5% or more ownership in a foreign company, that substantial interest must be declared in the Dutch tax return and any related income included as well.
*Transitional Rule:
Expats who were already using the expat ruling by December 2023 may still apply partial foreign tax liability in their 2025 and 2026 tax returns, but this transitional benefit expires starting 2027. After that, all worldwide assets and related income must be included in the Dutch tax filing. Read more about it here.
Inform expats early that they will need to report worldwide assets and any substantial interests (≥5%) in foreign companies on their Dutch tax returns.
Encourage expats to gather accurate valuations of assets and ownership stakes before the 2026 and 2027 filing seasons.
Coordinate with tax advisors so employees understand how this change affects their Box 2 and Box 3 tax position.
Consider offering briefings or guidance materials to help expats prepare for the broader reporting obligations.
This change has compliance implications beyond payroll — it affects personal tax planning and financial reporting for your international workforce. Making sure expats are aware now helps prevent surprises and supports better tax outcomes.
Use the downloadable expat ruling checklist to perform a full review of your expat population for 2025 and 2026 compliance and to prepare for the 2027 changes.