On the 16th of September 2025, the Dutch government's Tax Plan 2026 introduced new changes that directly affect expats working in the Netherlands. From January 1st, 2026, employers can expect a change in how they can support incoming employees through tax-free reimbursed under the ETK regulation.
First things first
When it comes to supporting new hires, employers have two different options: either apply for the expat scheme (formerly the 30% ruling), or reimburse the actual extraterritorial expenses (ETK) incurred by the employee. It’s important to know that the rules do not allow both approaches to be combined, it's either one or another. However, note that the 2026 Tax Plan does not change the expat scheme itself, but rather some of the ETK costs.
As mentioned, the ETK is a regulation for extraterritorial expenses that allows employers to reimburse employees for specific costs tax-free, helping expats manage the extra financial burden of relocating to the Netherlands. There are many different costs that can be reimbursed tax-free. A full overview of eligible expenses can be found on this page of the Belastingdienst website. However, from this list, two categories have now been excluded:
- Additional living expenses, such as water, gas, electricity, and other utilities.
- Private call costs with family and friends in the home country.
According to the new proposed changes, these two specific reimbursements will no longer qualify as tax-free benefits.
But why?
The reasons lie in:
- The higher costs of living in the Netherlands are already covered by salaries
Incoming employees in the Netherlands must already be paid at least the Dutch minimum wage, which is designed to reflect the local cost of living. In other words, the government argues that there’s no longer a need for employers to cover these extra living costs tax-free. - Private personal calls are not considered business-related
While staying in touch with loved ones abroad is essential, the government views these call expenses as primarily personal rather than business-related.
To sum up
Even though these adjustments are considered as “slight” and mainly impact the tax plan for the incoming employees, this means a bit more out-of-pocket expenses for expats, and for employers, the change reduces the scope of the tax-free benefits that they can offer to incoming employees. These changes will take effect from 1 January 2026, giving both employers and employees time to prepare. It may be wise to review current arrangements in advance to avoid any surprises.
A small transition that should not be overlooked.
