By means of this NewsFlash, we want to provide you with the relevant updates in light of the announced legislative proposals on Dutch Budget Day and other changes in legislation set to take effect on 1 January 2026. Below, you will find further details and considerations regarding proposed and upcoming legislation that is relevant from a global mobility tax perspective.
Wage tax – Changes to the extraterritorial cost regime
Under conditions, employers can reimburse inbound employees tax-free for the additional costs of temporary stay outside their country of origin as part of their employment in the Netherlands. In short, there are two methods for the tax-free reimbursement of these extraterritorial costs: a flat-rate scheme (the Dutch expat tax regime, or 30% ruling) and a scheme based on actual extraterritorial costs (ETK regime).
ETK regime: exclusion of COLA and private phone call expenses
As of 1 January 2026, it is proposed that certain costs currently eligible for tax-free reimbursement under the ETK regime can no longer be reimbursed tax-free. This concerns specifically cost of living expenses (often reimbursed via a ‘cost of living allowance’, COLA) and expenses for private phone calls (e.g. to the country of origin). It is good to note that the proposed change only applies to inbound employees (and not to outbound employees).
Dutch expat tax regime (flat-rate scheme, 30% ruling): no (further) changes
Unlike previous years, no (further) changes are proposed with respect to the Dutch expat tax regime. Consequently, the only change would be the regular (annual) indexation of the minimum salary norm to be eligible for the Dutch expat tax regime. As of 1 January 2026, the minimum salary norms are expected to amount to EUR 48,014 (regular norm) and EUR 36,497 (lowered norm, applicable to employees under 30 years of age with a qualifying Master’s), which equals an indexation of 2.9%.
We note that several (future) amendments to the expat tax regime already became part of the legislation (and are not reversed). The future key dates in this respect are as follows:
Wage tax – Employer levy on fossil-fueled company cars
As announced in the preliminary tax plan for 2026 earlier this year (Voorjaarsnota), the Dutch government introduces a new employer levy in the form of a penalty tax for employees’ private usage of fossil-fueled company cars, as a means to stimulate the electrification of lease fleets.
From 1 January 2027 onward, a 12% penalty tax will be levied from employers when they provide company cars that run on fossil fuels that are (also) used for private purposes to their employees. Travel between home and the workplace in this regard qualifies as private usage. The basis for the penalty tax will be the fiscal catalogue value of the company car (unless the car is first taken into use more than 25 years ago, then the current market value is used instead).
Concretely, this means that for a fossil-fueled company car with a fiscal catalogue value of EUR 50,000, employers will need to consider an additional employer levy of EUR 6,000 per year.
Fiscal catalogue value: EUR 50,000
Annual employer penalty tax: EUR 50,000 * 12% = EUR 6,000
For the sake of completeness, we note that employee taxation on the benefit in kind will remain unchanged.
This new levy can have a substantial financial impact on employers with a large lease fleet. For example, in the case of a fleet of 100 fossil-fueled company cars this would amount to a total annual employer levy of EUR 600,000.
For foreign-registered company cars the penalty tax could also apply. This could under circumstances be the case for Dutch cross-border commuters with a foreign employer, or for foreign employees who are assigned to work in the Netherlands.
The annual employer levy will need to be reported and paid ultimately over the second wage tax period after the tax year has ended. In practice this generally means that this will be part of the February wage tax return (which is due by the end of March).
Transitional rules
The new legislation will apply to fossil-fueled company cars that are first provided to employees on or after 1 January 2027.
For fossil-fueled company cars first provided to employees before 1 January 2027, the employer levy is only applicable from 17 September 2030 onward (resulting in a maximum transitional period of 5 years for cars provided at the latest on 17 September 2025).
Wage tax – Changes to employer levy on early retirement schemes (RVU)
As of 1 January 2026, the employer levy in case of an early retirement scheme will gradually increase. Currently, the applicable rate is 52%. This will be increased to 57.7% per 1 January 2026, to 64% per 1 January 2027 and to 65% per 1 January 2028.
In short, the employer levy for early retirement schemes can apply in case a payment is made to an employee upon termination of employment and this payment is intended to bridge the period between the end of employment and the start of the employee’s pension. Specific conditions have to be reviewed to determine whether a payment provided to an employee at the end of employment can be qualified as such. If so, this payment is subject to an employer levy.
In addition to the levy increase, it is proposed that the tax exemption threshold for early retirement schemes (RVU-drempelvrijstelling) will remain in place from 2026 onwards. Under this exemption, employees can stop working up to three years prior to reaching the state pension age (AOW-leeftijd) and receive a benefit from their employer equivalent to the state pension amount, without application of the employer levy of 52%. Also the amount of the tax exemption threshold will be slightly increased, with EUR 300 per 1 January 2026. This amount will be annually indexed.
Wage tax – Legislative proposal employee stock options startups follows in 2026
The earlier announced legislative proposal with respect to the taxation methodology of employee stock options of start- and scale-ups is not yet included in the 2026 Tax Plan. Instead, it is announced that this legislative proposal is expected early 2026. Currently, it is expected that this proposal will include a reduction of the taxable base of these specific stock options to 65%, and that these will be taxed at the moment of sale of the underlying share (instead of the moment the underlying share becomes freely tradeable, or upon election the moment of exercise).
Income tax – Relevant changes in Box 2 (substantial interests)
Changes to the lucrative interest regime (lucratiefbelangregeling)
On 3 July 2025, the House of Representatives adopted a motion requesting the government to include a measure in the 2026 Tax Plan that would impose a higher tax on individuals, specifically private equity managers who receive income from carried interest, in Box 2 with respect to their so-called indirectly held lucrative interest. In such cases, individuals hold their lucrative interest through a (personal) holding company in which they have a substantial interest. The income tax is currently limited to the Box 2 rate (24.5%/31%), provided that at least 95% of the carried interest benefits are received as substantial interest income in the year in which they are realized (in short). The motion proposed, in such situations, to increase the (Box 2) tax rate on carried interest income to 36%, starting from 1 January 2026.
In the 2026 Tax Plan, it is proposed to achieve this effective rate by increasing the taxable basis of an indirectly held lucrative interest via a multiplier. In short, this multiplier consists of the statutory Box 3 rate (36% in 2026) divided by the maximum Box 2 rate (31% in 2026).
As an example, an effective gain of EUR 1,000 will result in a (rounded) taxable gain of EUR 1,161 (1,000 * 36 / 31). The effective tax thereon in Box 2 is EUR 360 (1,161 * 31%), which equals 36% of EUR 1,000.
It is noteworthy that both the motion as well as the 2026 Tax Plan do not mention the possibility that income derived from indirectly held lucrative interest could also have been subjected to corporate tax. If this is the case, the effective combined tax rate over this income could increase from minimally 38.85% under current legislation to minimally 48.16% (and maximally up to 52.51%) under the proposed changes.
Lastly, please note that the proposed changes are not limited to private equity managers or carried interest, but apply to all indirectly held lucrative interests. There are no transitional rules proposed for existing indirectly held lucrative interests. To the extent that this is possible, taxpayers could opt for an accelerated realization income from carried interest, so that the 2025 (Box 2) rate can still be applied.
Income tax – Relevant changes in Box 3 (personal investment income)
It is proposed to increase the deemed return on investment for ‘other assets’. Currently, the deemed return on investment (“deemed ROI”) for other assets is 5.88%. This will increase to 7.78% per 1 January 2026.
Box 3 includes three categories of assets: savings, debts and other assets. Each category is subject to a different deemed ROI. All assets that are not savings or debts, are considered ‘other assets’ for Box 3 purposes (e.g. real estate, shares and bonds). Currently, the deemed return on investment for other assets is based on the long-term average return on real estate, stocks and bonds. Due to a proposed change in the underlying formula for the long-term average return, the deemed ROI will increase to 7.78% for 2026.
Furthermore, it is proposed to reduce the tax-free amount per taxpayer (heffingvrij vermogen) from EUR 57,684 in 2025 to EUR 51,396 for 2026. Additionally, the Box 3 exemption for so-called ‘green investments’ will be reduced per 2027 and abolished as of 2028.
There is a legislative proposal pending to further amend the Box 3 taxation (towards taxation based on actual ROI), which is currently with the House of Representatives. It is intended for this legislation to come into effect per 1 January 2028. In the meantime, taxpayers with an actual ROI lower than the deemed ROI have the option to request for Box 3 taxation based on their actual ROI. If the taxpayer can prove that the actual ROI is lower than the deemed ROI, only the actual ROI will be taxed (for more information on the actual ROI, please also refer to the website of the Dutch tax authorities).
We note that the legal status of the changes included in this NewsFlash is currently still draft legislation (unless indicated otherwise). As a next step, the proposed legislation will be further discussed in the Dutch House of Representatives (Tweede Kamer) and the Dutch Senate (Eerste Kamer). Considering the demissionary status of the Dutch cabinet and the minority position of the governing parties in the House of Representatives, the adoption of these proposals is not guaranteed. Amendments can be expected and we will have to await the outcome of this process.
As Vialto Partners, we can assist you with the required steps to obtain insight into the impact of the (proposed) legislation on your workforce, how to communicate this to employees and new hires and to take action in anticipation of the upcoming changes, e.g. in relation to the impact from a finance, payroll and reward perspective.
Please feel free to reach out to the following Dutch Vialto Partners colleagues to discuss further:
Niek Schipper
Partner
Cecile de Rooij
Senior Manager
Daan Hajer
Manager
Joey Bontrup
Manager
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