Expats in the Netherlands and their 2025 tax return

The expat scheme, often called the ‘30% facility’, is a tax break for foreign employees relocating to the Netherlands for work. The scheme was put in place to help Dutch employers recruit international talent. They’re always looking for new talented employees, and also search further afield rather than sticking to the labour market in the Netherlands. To put them on a competitive footing with foreign employers, the Dutch government has created a special tax facility for this category of employees: the 30% facility.

As a foreign employee who relocates the Netherlands, you incur additional costs, such as living expenses, travel expenses from your home country or additional expenses for advisers. These additional costs are referred to as ‘extraterritorial costs’.

If you satisfy the terms and conditions and apply together with your Dutch employer, you will be paid 30% of your wages tax-free rather than receive a tax-free reimbursement of your costs. To get this tax break, you and your employer must submit an application to the Dutch Tax and Customs Administration.  

Please note: since 2024, there has been a cap on the amount of salary that employers may pay tax-free.

The Dutch Tax and Customs Administration approved your application because you have specific expertise that is scarce on the Dutch job market. Your application may also have been approved because your employer has seconded you to the Netherlands, for example. As this is a temporary situation, the Dutch Tax and Customs Administration grants you the tax break for a period of 5 years.

Formally speaking, the 30% is a ‘tax-exempt’ allowance that is separate from your salary. Your employer therefore doesn’t have to withhold any payroll tax from this allowance, and you don’t have to declare the allowance on your income tax return. If you hadn’t yet used the 30% facility in 2022, your ‘tax-free allowance’ for 2025 is capped at €73,800.

If you were already using the 30% facility before 2024, you can benefit from ‘partial non-resident taxpayer status’ on your 2025 income tax return. This means you can complete your tax return as if you were a non-resident taxpayer, even though you were living in the Netherlands. As a result, you won’t have to declare your assets – apart from any real estate you own in the Netherlands – in box 3 (income from savings and investment).   

For other rules, such as your taxable income from work and home ownership (box 1), the partner scheme, and how you allocate income components between yourself and your tax partner, you’ll be taxed as a Dutch taxpayer.

Partial non-resident taxpayer status is an option you choose on your income tax return by answering the questions about box 2 and box 3 as if your assets were subject to tax in another country. You can choose this option every year as long as you qualify for the 30% facility. Starting in 2025, this facility applies only if you qualify for a transitional arrangement.

We have outlined above what the 30% facility is. This is a simplified description of a complex scheme, and you may have income and/or assets in more than one country. If so, you need to find out in which country you must file your tax return and pay tax.  

We therefore recommend that you always get solid advice from an expat tax adviser, including when filling in your 2025 income tax return.