30% facility for highly educated foreign employees (expats)
Highly educated foreign nationals working in the Netherlands (expats) may be eligible for an annual tax-free allowance from their employer of up to 30% of their salary. This tax benefit is intended to compensate employees for the additional expenses they incur, such as those relating to travel or furnishing a home. Since 1 January 2024, the tax benefit has been gradually scaled back.
Please note: The Dutch government has plans to partially reverse the planned scaling back of thax deduction for 'expat' employees as of 2027. The effective date of this measure is not yet final. Entry into force is subject to its passing through the Lower and Upper Houses (Tweede en Eerste Kamer) of parliament.
Tax benefit to compensate foreign employees for extra costs
The 30% facility is for foreign employees working in the Netherlands temporarily who earn more than €46,107 a year. Under certain conditions, they are eligible for a tax-free allowance of up to 30% of their salary for up to 5 years. The maximum salary amount to which the allowance applies is €233,000 a year. The employer pays the allowance and arranges the tax exemption with the Tax Administration.
The allowance is intended to cover the costs of working in the Netherlands. For example, travel costs and additional accommodation and living expenses. Many expats rent accommodation in the Netherlands but still have a home in the country they came from.
Conditions for the 30% facility
The conditions for the 30% facility are set out on the Tax Administration website.
The employer must apply to the Tax Administration for the 30% facility.
30% facility scaled back since 1 January 2024
From 1 January 2024, expats who meet the conditions receive the following tax benefits:
- 30% tax free for the first 20 months;
- 20% tax free for the next 20 months;
- 10% tax free for the last 20 months.
Until the end of 2023, highly educated foreign employees could receive 30% of their annual salary tax free for up to 5 years.
Employees who made use of the facility in 2023 are entitled to a 30% tax-free allowance for the full 5 years.
30% facility applies to amounts up to €233,000
The tax-free allowance applies to salary amounts of up to €233,000 a year (amount for 2024). That amount is the upper limit for top salaries specified in the Top Incomes (Standardisation) Act.
Expats who have received the 30% tax-free allowance since 2022 will be subject to the upper limit for top salaries from 1 January 2026.