Budget Day 2027
What Will Change for Employers in 2027?
Budget Day proposals and previously announced measures
On Budget Day, the 2027 Tax Plan was presented. A number of relevant changes are expected for employers, including higher employer costs, changes to the Work-Related Costs Scheme (WKR), new rules for company cars, adjustments to wage tax and a new tax regime for employee stock options. Several other measures had already been announced before Budget Day and are also expected to take effect from 1 January 2027.
Werque.nu summarises the most important proposals in a short and practical overview.
Good to know: the measures included in the 2027 Tax Plan are still legislative proposals. They may therefore be amended during the parliamentary process in the House of Representatives and the Senate.
1. New Box 1 tax rates and tax credits
The tax rates and brackets in Box 1 of Dutch personal income tax will change as of 1 January 2027. For employees who have not yet reached the Dutch state pension age (AOW age), the proposed rates are:
2026 | 2027 | |
First bracket rate | 35.75% | 36.23% |
Second bracket rate | 37.56% | 38.16% |
Third bracket rate | 49.50% | 49.50% |
Upper limit of first bracket | €38,883 | €39,247 |
Start of third bracket | €78,426 | €78,426 |
The main tax credits will also change:
2026 | 2027 | |
Maximum general tax credit | €3,115 | €3,154 |
Maximum employment tax credit | €5,685 | €5,929 |
Start of phase-out of employment tax credit | €45,592 | €47,834 |
What does this mean for employers?
The changes will automatically be incorporated into the wage tax tables and therefore into payroll administration systems. However, the following situations should be reviewed separately:
Net salary arrangements.
Tax equalisation and tax protection.
Expat packages.
Guarantees regarding net income.
Salary split arrangements and international remuneration situations.
Werque.nu tip: review these situations carefully, as changes in tax rates can directly result in higher or lower employer costs.
2. Tax-free travel allowance increases to €0.25 per kilometre
The maximum tax-free mileage allowance will increase from €0.23 to €0.25 per kilometre.
Remarkably, the increase will apply retroactively from 1 January 2026. This does not automatically mean that employers are required to reimburse €0.25 per kilometre. This depends on the arrangements included in the employment contract, collective labour agreement (CLA) or company policy.
What does this mean for employers?
Check how the travel allowance is defined within your organisation. If the arrangement specifies a fixed amount of €0.23 per kilometre, there is no automatic change from an employment law perspective. If, however, the arrangement refers to the maximum tax-free mileage allowance, the increase may directly affect the amount employees are entitled to receive.
Werque.nu tip: also consider whether a retroactive payment for 2026 is possible and desirable, and whether this can be optimised for tax purposes through a salary exchange arrangement, such as a cafeteria plan or individual choice budget.
3. Employer costs increase due to higher Aof contribution
The government is introducing a so-called freedom contribution (vrijheidsbijdrage) for businesses. A significant part of this contribution will be financed through an increase in the employer contribution to the Dutch Disability Fund (Arbeidsongeschiktheidsfonds – Aof).
The exact Aof contribution rates for 2027 are not yet known.
What does this mean for employers?
An increase in the Aof contribution will result in higher employer costs in 2027.
4. WKR: exemption for employee discounts on own products abolished
Employers can currently provide employees with discounts on products from their own business or industry under certain conditions. Within the Dutch Work-Related Costs Scheme (Werkkostenregeling – WKR), a specific exemption applies of up to 20% of the fair market value of the product, subject to a maximum of €500 per employee per year.
The government intends to abolish this exemption as of 1 January 2027.
From that date, the employee discount must either be designated as part of the employer's discretionary scope under the WKR or treated as taxable employment income for the employee. This is particularly relevant for employers in sectors such as:
Retail.
Manufacturing.
Financial services.
Other sectors in which employees receive discounts on the employer's own products or services.
For the time being, no other changes to the WKR are proposed.
Werque.nu tip: identify which employee discounts are currently being provided and calculate the impact of abolishing the exemption on your available WKR discretionary scope.
Note: it had already been decided that, from 1 January 2027, the discretionary scope over the first €400,000 of the employer's taxable wage bill will increase from 2.00% to 2.16%.
For the part of the taxable wage bill exceeding €400,000, the current percentage of 1.18% will continue to apply. For an employer with a taxable wage bill of €400,000, this results in an additional €640 of discretionary scope in 2027 compared with 2026.
5. Fossil-fuel company cars become more expensive
From 1 January 2027, the pseudo-final levy for fossil-fuel passenger cars will effectively apply.
If a fossil-fuel passenger car is made available to an employee and may also be used for private purposes, the employer may become liable for an additional levy equal to 12% of the vehicle's list price per year.
An important aspect of this regime is that commuting is also regarded as private use.
The 2027 Tax Plan package proposes several relaxations compared with the original proposal, including:
An exemption, subject to conditions, for temporary replacement vehicles and short-term provision of vehicles.
Extension of the transitional rules for existing vehicles until 31 December 2030.
An exemption for driving-school vehicles.
An anti-cumulation provision in relation to excessive severance payments.
What does this mean for employers?
Employers with leased vehicles or their own company car fleet should establish before 2027:
Which fossil-fuel vehicles fall within the scope of the rules.
When each vehicle was first made available to an employee.
Which vehicles qualify for the transitional rules.
What the additional employer costs will be.
Werque.nu tip: this is the right time to reassess your mobility and company car policy.
6. Youngtimer scheme further restricted
The youngtimer scheme will also change. The minimum age of a vehicle will become:
17 years in 2027.
20 years from 2028 onwards.
Transitional rules will apply to certain existing situations. The approval for certain existing users prior to 1 January 2026 will also be formally incorporated into the rules with retroactive effect to 1 January 2026. For employers, this means that not only the age of the vehicle is relevant. The date on which the vehicle was first made available to the employee may also determine the tax consequences.
Werque.nu tip: identify all youngtimers in the company car fleet, taking into account both the age of the vehicle and the date on which it was first made available, and assess the new tax consequences.
7. Pensionable salary cap remains €137,800 until 2032
The maximum salary on which tax-facilitated pension accrual is currently permitted amounts to €137,800. The government intends not to index this threshold from 2027 through 2032.
This means that, as salaries increase, an increasingly large proportion of an employee's income may exceed the maximum tax-facilitated pensionable salary. This is particularly relevant for:
Higher-income employees.
Supplementary or excess pension schemes.
Additional pension arrangements.
Compensation arrangements.
International employees.
Werque.nu tip: check whether employment conditions or pension arrangements are linked to the statutory pensionable salary cap.
8. New stock option regime for start-ups and scale-ups
A new tax regime for employee stock options will be introduced for qualifying start-ups and scale-ups. Subject to certain conditions, only 65% of the benefit will be treated as taxable employment income. In addition, the taxable moment will in principle be postponed until the shares acquired following exercise of the options are actually sold. This could make employee share participation significantly more attractive.
At the same time, the regime will involve various conditions, administrative requirements and complexities, including:
Qualification as a start-up or scale-up.
A formal decision from the Netherlands Enterprise Agency (RVO).
Administration of options and shares granted.
Employees leaving employment before the shares are sold.
Immigration and emigration of international employees.
The intended effective date is 1 January 2027, although the definitive date still needs to be determined and could possibly fall later in 2027.
Werque.nu tip: for start-ups and scale-ups, it may be worthwhile to have existing and draft employee share plans reviewed now and/or to start preparing new share plans.
9. International employees
Expat scheme becomes a 27% scheme
Employers with international employees will also face a number of changes in 2027.
From 1 January 2027, the Dutch expat scheme – formerly known as the 30% ruling – will become a 27% scheme for many employees. This means that a maximum of 27% of qualifying employment income may be reimbursed tax-free. Higher salary thresholds will also apply to new cases.
Transitional rules apply. Employees who were already using the scheme by 2023 may, subject to certain conditions, continue to apply the 30% tax-free allowance and the old indexed salary threshold for the remaining duration of the scheme. For employees who entered the scheme later, the 27% percentage and/or higher salary threshold may apply from 2027.
What does this mean for employers?
Before 2027, employers should determine for each employee:
When the expat scheme was first applied.
Which percentage will apply from 2027.
Which salary threshold applies.
Whether the employee's 2027 salary will still satisfy the applicable threshold.
Whether the applicable salary threshold continues to be met at the end of the calendar year and, preferably, throughout the year.
What the changes mean for any net salary or tax equalisation arrangements.
Werque.nu tip: also review employment contracts and assignment letters that explicitly promise a net allowance or a 30% allowance. A reduction of the tax-facilitated percentage from 30% to 27% does not automatically mean that the contractual agreement between employer and employee changes accordingly.
Note: the transitional rules for partial foreign taxpayer status, which have been in place since 2025, will end on 1 January 2027. From 1 January 2027, the regular Dutch tax rules for Box 2 and Box 3 will therefore apply to these employees. This change could have a significant financial impact on expats. Any arrangements employers have with the Dutch Tax Administration under which wage tax withholding is aligned with the employee's ultimate personal income tax liability will also end when the transitional rules for partial foreign taxpayer status expire.
Highly skilled migrants: stricter rules in preparation
The highly skilled migrant scheme (kennismigrantenregeling) is also on the government's policy agenda. The government intends to make the scheme more robust and future-proof, while retaining it as an accessible route for international talent. Previously announced proposals include:
Higher salary thresholds.
Stricter requirements for recognised sponsors.
However, the measures are still under development and there is currently no definitive effective date.
Werque.nu tip: employers that make use of highly skilled migrants should closely monitor these developments.
10. Measures announced previously
RVU threshold exemption
The RVU threshold exemption was made permanent as part of the 2026 Tax Plan. Subject to certain conditions, employers can therefore provide employees in the final three years before reaching their AOW pension age with an early retirement payment without being liable for the RVU pseudo-final levy, provided that the payment remains within the exempt threshold. At the same time, the pseudo-final levy on amounts exceeding the RVU threshold exemption will gradually increase:
57.7% in 2026.
64% in 2027.
65% from 2028 onwards.
In addition, there is an additional tax-facilitated amount of up to €300 gross per month on top of the regular exemption for certain employees with a low income or limited supplementary pension provision.
Wage cost benefit
From 1 January 2027, if an employee changes employer, the remaining entitlement to a wage cost benefit (loonkostenvoordeel – LKV) may, subject to certain conditions, transfer to the new employer. The employee can apply for a new target group declaration for this purpose. The LKV for older employees has already been abolished for new cases. For older employees who entered employment before 1 January 2024, an LKV could still be obtained under transitional rules. This transitional entitlement will expire no later than 1 January 2027.
Self-employed workers / freelancers
From 31 December 2026, a statutory presumption of the existence of an employment contract will apply where an individual's hourly rate is below €38. Only the self-employed worker can invoke this presumption. The client must then demonstrate that there is no employment relationship. The €38 threshold will be linked to the statutory minimum wage and may therefore change in future.
The government has also further developed the proposed Self-Employed Persons Act (Zelfstandigenwet), which will shortly be submitted for public consultation. The intention is to provide greater scope for genuine self-employment and to give self-employed workers more certainty in advance regarding their employment status.
Agency workers
From 31 December 2026, temporary agency workers will have a statutory right to employment conditions that are at least equivalent to those of employees employed directly by the hiring company. This goes beyond equal pay alone: equivalence applies to the overall employment conditions package.
Wtta: new obligations for suppliers and users of temporary labour
The Act on the Admission of Labour Suppliers (Wet toelating terbeschikkingstelling van arbeidskrachten – Wtta) has now been adopted and will enter into force on 1 January 2027.
Employment agencies, secondment companies and other suppliers of labour will be required to obtain authorisation under the new system. However, regular employers that hire external personnel will also be affected: ultimately, users of temporary labour may only do business with authorised labour suppliers. Transitional rules apply subject to certain conditions. Labour suppliers wishing to make use of those transitional rules will therefore need to take action during 2026. Enforcement of the authorisation requirement by the Netherlands Labour Authority will commence on 1 January 2028.
Compensation for statutory severance payments may be abolished
The government originally intended to abolish, from 1 January 2027, compensation for statutory severance payments following dismissal due to long-term incapacity for work for all employers. Compensation for statutory severance payments following closure of a business due to the employer's retirement or death was also intended to be abolished.
This proposal could have significant financial consequences for employers. For example, when an employee is dismissed following two years of sickness, the employer generally remains liable to pay the statutory severance payment, but would no longer receive reimbursement from the Employee Insurance Agency (UWV). It has now been decided to postpone the abolition by one year. The legislative process still needs to be completed, meaning that 1 January 2028 is not yet a definitive effective date.
Pay transparency obligations
Under European rules, Dutch legislation on pay transparency is due to take effect from 1 January 2027. The legislative proposal has not yet been finalised, however, and the Netherlands would prefer a later implementation date. Under the proposed legislation, employers will face requirements including:
Greater transparency regarding salary scales.
Objective and gender-neutral job evaluation systems.
Information about salary or the applicable salary range before employment begins.
A prohibition on asking job applicants about their previous salary.
Reporting obligations for larger employers.
Stronger employee rights in cases of unequal pay.
What should employers review now in preparation for 2027?
1. Travel expenses
Does the €0.25 tax-free mileage allowance fit within your current employment conditions?
2. WKR
Which employee discounts will start using up the discretionary scope from 2027?
3. Employer costs
What will the higher Aof contribution mean for your total personnel costs?
4. Mobility
Which fossil-fuel company cars will fall within the 12% pseudo-final levy?
Can the transitional rules be applied?
5. Pensions
Does the freezing of the pensionable salary cap have consequences for higher-income employees?
6. International employees
What do the changes to the expat scheme mean for your expats?
And what do the new tax rates and rules mean for net salary arrangements and tax equalisation policies?
7. Employee participation
Could the new employee stock option regime be relevant for your organisation?
8. RVU threshold exemption
Can the exemption be used in connection with employee terminations?
9. Self-employed workers
Review your external workforce and assess potential employment status risks.
10. Agency workers
Assess whether equivalent employment conditions are being provided and make sure that, as a hirer, you also comply with the applicable requirements.
11. Suppliers and users of temporary labour
Prepare for the entry into force of the Wtta.
12. Compensation for statutory severance payments
Check whether all claims for compensation have been or will be submitted on time, and consider whether dismissal procedures could or should be brought forward in order to remain eligible for compensation.
Werque.nu is happy to assist you with the above actions.
Questions?
Over the coming months, the 2027 Tax Plan will continue to be debated in the House of Representatives and subsequently in the Senate. Werque.nu will continue to monitor developments and keep you informed about changes that are relevant to employers.
Would you like to know what these measures mean specifically for your organisation?
Please feel free to contact us.
Payroll Taxes | Global Mobility | Policies and Processes
Fabiënne Hol-van Goethem
T: 06 22 89 39 26
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