Key tax tips for employers and employees

No soft landing for self-employed workers from 2026  

As of 1 January 2025, the enforcement moratorium for self-employed workers has been lifted, allowing the Dutch Tax Authorities to resume enforcement regarding the relationship between principals and self-employed workers. If the Dutch Tax Authorities determine that an individual should be classified as an employee for payroll tax purposes, it is possible to impose additional tax assessments for 2025 and subsequent years. 

Starting 1 January 2026, the ‘soft landing’ will also come to an end. The soft landing meant that no fines would be imposed by the Dutch Tax Authorities for the year 2025, even if they concluded that the individual should have been treated as an employee for payroll tax purposes rather than as a self-employed worker. From 1 January 2026 onward, the Dutch Tax Authorities can also impose penalties for 2026 and beyond. 

Work-Related Costs Scheme 

The Work-Related Costs Scheme (WKR) allows employers to provide tax-free reimbursements or benefits to employees. In 2026, the WKR will amount to 2 per cent for the wage sum up to € 400,000. For the portion of the wage sum exceeding € 400,000, a rate of 1.18 per cent applies. If you reimburse or provide more than the available discretionary budget, you as an employer will owe a final levy of 80 per cent. 

The end of the year is a good moment to assess which reimbursements, benefits and provisions fall within your organisation’s discretionary budget and how these have been designated as such. Your organisation may not have fully utilised the available budget yet, or it may be necessary to evaluate whether adjustments are needed to avoid exceeding the discretionary limit. 

Salary criteria for highly skilled migrants and employees with 30%-ruling 

As an employer, you may hire a highly skilled migrant from a non-European country under the highly skilled migrant permit. This permit requires meeting a salary threshold. Additionally, you may employ workers who benefit from the 30%-ruling, which also has a salary criterion. It is important to assess before year-end whether the applicable salary thresholds are met and whether any additional payments are needed to comply with the minimum salary requirements. 

Considerations for the 30%-ruling 

For certain employees who come to the Netherlands from another country to work here, their employer may give untaxed reimbursement (specific exemption) of certain additional costs due to temporary work and residence in the Netherlands. These additional costs can be reimbursed on a claim basis, but it is also possible, under certain conditions, to apply a so-called 30%-ruling (expat tax regime) from the Dutch Tax Authorities. By applying a 30%-ruling, an employer can reimburse up to 30 per cent of the salary untaxed without further substantiation of the costs. 

From 2027, the percentage of the current 30%-ruling will be reduced to 27 per cent. Expats who used a 30%-ruling before 2025 may continue to apply 30 percent after 2027. For expats applying a 30%-ruling from 2025, a percentage of 27 per cent will apply from 2027. It is therefore important to have a clear understanding of which employees fall under which percentage from 2027. 

An additional point of attention is that employers must take into account that the 30%-reimbursement cannot be applied to salary amounts exceeding the threshold set by the Dutch Public Sector Executives Pay Standards Act (WNT). For 2026, this threshold is set at € 262,000. 

Furthermore, the partial foreign tax liability status has been abolished as of 1 January 2025. For employees who held this status before 2024, transitional rules apply until 1 January 2027. We recommend informing your employees about this change so they can seek advice on the implications for their personal income tax returns. 

Information reporting obligation 

If you are a withholding agent for payroll taxes and have made payments to individuals who are not employed by you, you are required to report certain information to the Dutch Tax Authorities. This obligation applies to payments made to individuals: 

• who are not employed by the withholding agent; and 
• who do not issue invoices, or issue invoices without VAT. 

The latter applies when the invoice shows 0 per cent VAT, € 0 VAT, or no VAT at all (for example, due to VAT-exempt services or because the individual falls under the Small Businesses Scheme – ‘KOR’). The reporting obligation also applies if the invoice states ‘VAT reverse-charged'. This obligation does not apply if the volunteer tax scheme or the artists and professional athletes scheme can be used. 

The following details must be submitted before 1 February of the year following the year in which the payment was made: 

• the amount paid; 
• the date of payment; 
• personal details of the recipient:  
  • citizen service number (BSN)
  • name
  • address
  • date of birth

Extraterritorial Costs Scheme 

The 2026 Tax Plan includes a proposal to scale back the scheme for extraterritorial costs (known as the ETK scheme). The ETK scheme allows employers to reimburse extraterritorial costs incurred by an employee for temporary residence outside their country of origin on a tax-free basis. As of 1 January 2026, extraterritorial costs related to additional living expenses can no longer be reimbursed tax-free to incoming employees under the targeted exemption for extraterritorial costs. In practice, these living expenses are also referred to as COLA reimbursements (Cost of Living Allowance), which include costs for gas, water, electricity, and utilities. The proposal means that such costs can, in principle, also no longer be included in a salary exchange arrangement for extraterritorial costs under the targeted exemption. 

This change may lead to a decrease in net salary or an increase in the cost price for temporary workers, depending on the agreements made with employees. We advise analysing the impact of this change in a timely manner. 

It is important to note that the scaling back only applies to COLA reimbursements. Other extraterritorial costs (such as double housing and home leave) can still be reimbursed tax-free under the targeted exemption, provided the conditions are met. If these options are not yet being used, they may serve as an alternative to compensate for the loss of COLA reimbursements. 

Finally, the 30%-ruling (expat tax regime) may be an attractive alternative, provided that the conditions for this are met, including a minimum taxable salary. This scheme offers a fixed reimbursement of extraterritorial costs without substantiation. 

New pseudo-final levy for fossil-fuel cars 

The 2026 Tax Plan includes a new tax measure that will take effect on 1 January 2027: the introduction of a pseudo-final levy for employers who provide employees with a car that is not fully emission-free. These vehicles are referred to by the legislator as fossil-fuel cars. 

The pseudo-final levy amounts to 12 per cent of the catalog value, including VAT and BPM. For vehicles older than 25 years, the market value is used. The final levy applies to all non-emission-free cars (including hybrid vehicles) and is entirely borne by the employer. Commercial vans (except passenger vans used for healthcare transport) and motorcycles are excluded from the scheme. 

It is important to emphasise that commuting is considered private use under this scheme, which means the pseudo-final levy may also apply even if no regular benefit-in-kind (‘bijtelling’) is charged to the employee. The measure is levied in addition to the existing benefit-in-kind and cannot be passed on to the employee. 

If a fossil-fuel car is provided prior to 1 January 2027, a transitional arrangement applies until 17 September 2030. If a fossil-fuel car is first made available after 1 January 2027, the pseudo-final levy applies immediately from 1 January 2027. The levy is calculated per calendar month, but does not need to be paid monthly. Employers may pay the levy annually, no later than with the February payroll tax return of the following year. For the year 2027, this means payment must be made by 31 March 2028. It is also possible to make a provisional payment during the year, followed by a final settlement. 

Although this is still a proposal and would only take effect in 2027, it is advisable to review your mobility policy in advance. The pseudo-final levy could represent a significant additional cost. Employers entering into new lease contracts in 2025 and 2026 should be aware of the impact of contract duration, especially if contracts extend beyond 17 September 2030. By anticipating the new legislation now, employers may be able to avoid the application of the pseudo-final levy.  

VAT deduction limit on employee benefits and corporate gifts (BUA) 

If you have deducted VAT on expenses for corporate gifts or employee benefits during 2025, an annual review is required to assess whether the deduction can actually be maintained. This is because entrepreneurs can only deduct VAT on expenses for employee benefits or other corporate gifts if they do not exceed the threshold amount. If you have favored one or more employees (or relations) for more than € 227 (excluding VAT), the VAT cannot be deducted retroactively, and a correction is required. A separate calculation applies here for food and drinks for employees. From 2024, the own contribution of employees no longer applies as a deduction on expenditure, so the total expenditure must be assessed against the threshold amount. Special attention is required for items such as home working facilities, both whether the VAT is deductible and whether this expenditure leads to a BUA correction. 

VAT correction for private use of company car 

If you provide a lease car to your employees and the car is also used for private purposes, an end-of-year correction is mandatory in the last VAT return of the year. A flat rate of 2.7 per cent from the list price (or 1.5 per cent in specific cases for cars that have been in use for more than 5 years) can be used for this purpose. 

Please note that commuting is also private for VAT purposes (unlike for payroll tax purposes). A ‘no private use’ declaration for payroll tax purposes cannot exclude a VAT correction. Moreover, the 500km limit does not apply as well for VAT purposes (as is the case for payroll tax purposes). 

Want to know more about the above year-end tips? 

Would you like to know more about a subject from these year-end tips? Your Forvis Mazars tax advisor is more than happy to assist you further.