2025 income standards for the 30% facility
From 1 January 2025, the income standards for the 30% facility have changed. This is a brief overview of the significant changes:
This is an excerpt from an article originally published in Vakblad GOW (Grensoverschrijdend Werken) (NL). Authors: Setenay Gölpunar and Tijn Emmer, both from EY in Rotterdam, People Advisory Services department
Employees recruited from outside or seconded to the Netherlands to come and work in the Netherlands may be eligible for an untaxed allowance to reimburse his or her extraterritorial expenses. In this context, employers may choose to reimburse actual extraterritorial expenses or apply the 30% facility under certain conditions.
One of the conditions of the 30% facility is that the incoming employee possesses specific expertise that is absent or scarce in the Netherlands labour market. This is assessed on the basis of a toetsloon (income standard) that is adjusted annually. These income standards resemble the income standards of the kennismigrantenregeling (national highly skilled migrant scheme), but are not identical. The reason for different income standards is that the income concept for the 30% facility differs from the income concept for the national highly skilled migrant scheme.
The 30% facility is subject to a higher and a lower income standard. The lower standard applies to employees younger than 30 with a master's degree from the Netherlands or an equivalent degree attained outside the Netherlands. In contrast, the higher income standard applies to employees under 30 without a master's degree and those aged 30 and above. From 1 January 2025, the income standards for the 30% facility will be as follows:
- Lower income: taxable annual income exceeds €35,468 excluding untaxed compensation;
- Higher income: an employee's taxable annual income exceeds € 46,660 excluding the untaxed allowance.
Please note: if an employee's taxable wages fall below the income standard after application of the untaxed reimbursement, the employee will not be eligible for a full untaxed reimbursement of 30% of the wages. In that case, a lower untaxed reimbursement of less than 30% must be paid – referred to as a partiële toepassing (partial application) – so that the taxable wage meets the income standard.
Changes to the 30% facility following the implementation of the Belastingplan (Tax Plan) 2025
With effect from 1 January 2024, the 30% facility was changed to a 30-20-10% facility. As a result, the maximum untaxed remuneration became dependent on the maximum duration of the scheme. Except where transitional law would apply, the maximum untaxed remuneration was 30% for the first 20 months, 20% for the subsequent 20 months and 10% for the last 20 months of the maximum term.
The Eerste Kamer (Senate) had agreed to this change under the condition that the 30% facility would be evaluated in 2024, after which kabinet (Cabinet) would have to come up with better proposals for adjusting the facility. In June 2024, the evaluation report Kunde, kosten en keuzes (Skills, costs and choices) was published, as a result of which new changes to the 30% facility were announced in the 2025 Tax Plan.
The 27% facility
The new plans indicate that the 30-20-10% scheme will be largely reversed with effect from 1 January 2025 and a flat rate of 30% untaxed compensation will again apply for the years 2025 and 2026. With effect from 1 January 2027, the scheme will be scaled down to a 27% scheme, where the untaxed compensation will be capped at 27% and stricter income standards will apply. The new income standard from January 2027 will be €50,436 for regular situations, and €38,338 for employees under 30 with a master's degree. These amounts will be indexed by the table correction factor for 2025, 2026 and 2027.
Transitional arrangements
There is a transitional arrangement for employees for whom the 30% facility was applied in payroll before 2024. A partial transitional arrangement applies to employees for whom the 30% facility was first applied in the payroll in 2024. The groups of employees can be categorised as follows:
- Employees who activated the 30% facility before 2024: retain the right to a full 30% allowance after the 27% facility takes effect on 1 January 2027, provided the old (indexable) income standard of €46,107 (2024 amount) (excluding the untaxed allowance) is met. The employer can pay this group of employees up to 30% of the income tax-free for a period of up to 5 years.
- Employees who activated the 30% facility for the first time in 2024: retain the right to a full 30% allowance in 2024, 2025 and 2026, provided the old (indexable) income standard of €46,107 (2024 amount) (excluding the untaxed allowance) is met. From 1 January 2027, the percentage of the maximum untaxed compensation will be adjusted from 30% to 27%, but the old (indexable) income standard of €46,107 will still apply. This means that, depending on the maximum term, the employer can pay the employee a maximum of 30% in part and a maximum of 27% tax-free in part.
- Employees who activated the 30% facility for the first time in or after 2025: are not eligible for transitional arrangements. They will still be entitled to the maximum 30% allowance in 2025 and 2026, provided they meet the old (to be indexed) income standard of €46,107 (amount 2024). From 1 January 2027, the percentage of the maximum untaxed reimbursement will be adjusted from 30% to 27% as well as an increased (to be indexed) income standard of €50,436 (€38,338 for employees under 30 with a master's degree) will apply.
The above can be presented schematically as follows, where the amounts mentioned are still the 2024 amounts, before indexation to 2025 and beyond:
Category | Income criteria | Maximum tax-free reimbursement |
30% facility activated before 1-1-2024 for the first time | Current income criteria (€46,107) | 30% |
30% facility activated in 2024 for the first time | Current income criteria (€46,107) | 30%; from 1-1-2027 decreased to 27% |
30% facility activated in 2025 for the first time | Current income criteria (€46,107); increased income criteria (€50,436*) from 1-1-2027 | 30%; from 1-1-2027 decreased to 27% |
Under 30 master’s degree holder, 30% facility activated before 1-1-2024 for the first time | Current income criteria (€35,048) | 30% |
Under 30 master’s degree holder, 30% facility activated in 2024 for the first time | Current income criteria (€35,048) | 30%; from 1-1-2027 decreased to 27% |
Under 30 master’s degree holder, 30% facility activated in 2025 for the first time | Current income criteria (€35,048); increased income criteria (€38,338) from 1-1-2027 | 30%; from 1-1-2027 decreased to 27% |
* Amounts subject to annual indexation
Points to note
- Provide a clear overview of the changes and transitional arrangements for each employee. It is important to assess for each individual employee what their correct untaxed allowance percentage is, whether the old or the new income standard applies, and whether the untaxed allowance will be capped. For this purpose, the start date of the 30% facility with a previous employer could possibly also be relevant.
- Based on transitional arrangements, for employees for whom the 30% facility was activated before 2024, the percentage of the maximum untaxed allowance will also remain 30% after 1 January 2027.
- Employees for whom the 30% facility was activated before or in 2024 and an interruption of the 30% facility occurred in 2024 or later, as of 1 January 2027 they are not eligible for the transitional arrangements of the 30% facility. Only if the work started again in 2024 does the limited transitional arrangement still apply (although the percentage is reduced to 27% from 2027, but the current income standard is maintained).
- Consider annually whether it is more advantageous to provide tax-free reimbursement of actual extraterritorial costs instead of applying the 30% facility. This is because, in specific cases, the scheme may result in the actual extraterritorial expenses exceeding the tax-free reimbursement of up to €73,800 per year (amount 2025). This makes it worthwhile for employers to assess whether it is more advantageous at any time to opt for tax-free reimbursement of the actual extraterritorial costs instead of applying the 30% facility. This choice can be made annually in the first payroll period of the calendar year and then applies for the entire calendar year 1.
Footnotes
1 See section 31a(17) of the Wet op de loonbelasting (Payroll Tax Act) 1964.
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