Free Space in the Work-Related Costs Scheme (WKR)
The percentage of the first bracket of the free space in the WKR remains unchanged in 2026 at 2%, the same as in 2025.

From 2027, the free space in the first bracket will increase to 2.16%. This provides employers, particularly in the SME sector, with more fiscal possibilities to offer attractive employment conditions. With this expanded free space, employers can more easily reimburse sustainable benefits, gym memberships, or additional home-working allowances.

Reduction of the extraterritorial costs scheme
Employers may tax-free reimburse employees who temporarily work outside their home country for the additional costs this work entails. There are two schemes for this: the so-called “30% ruling” and the scheme based on actual extraterritorial costs scheme (ETK scheme).

It is proposed to reduce the ETK scheme from 2026. Extra living expenses, including gas, water, electricity, and other utilities, as well as additional communication costs (telephone costs) for private purposes with the home country, will no longer be reimbursed tax-free from that date.

No further reductions of the 30% ruling
The government has decided not to implement any further reductions to the expat scheme (30% ruling), except for the previously announced reduction of the maximum percentage from 30% to 27% as of January 1, 2027.

The 30% ruling will continue to apply for incoming employees who meet the conditions. When granted, employers may reimburse up to a maximum of 30% of the taxable gross salary in the Netherlands tax-free for a maximum period of five years.

This expat scheme is considered an important instrument for Dutch employers to attract international talent and thereby strengthen the business climate in the Netherlands.

Annual adjustment of salary cap for the 30% ruling
Since January 1, 2024, the 30% allowance under the expat scheme has been capped and is calculated as a maximum of 30% of the WNT standard (Dutch “Standardization of Top Incomes Act”). This salary cap applies to all employees using the scheme, including those outside the (semi-)public sector.

For 2025, the WNT standard amounts to € 246,000, and for 2026 it is set at € 262,000. Consequently, the maximum 30% allowance in 2026 will be € 78,600 per year. Employees who applied for the scheme before January 1, 2022, benefit from a transitional arrangement; until 2025 no salary cap applied for them. From 2026 and onwards, the cap will apply to all employees.

Penalty tax for company cars for employers
From January 1, 2027, an additional levy will apply to all new passenger cars with fossil fuel engines provided to employees for private use.

The penalty amounts to 12% of the car’s value, based on the catalogue price, unless the car is older than 25 years, in which case the economic market value applies.

This levy is in addition to the regular private use addition and needs to be fully taken into account by the employer, creating an additional cost that cannot be passed on to the employee.

The measure applies to all fossil-fuel passenger cars, including hybrids, used for private purposes. Fully emission-free vehicles are exempt. Private commuting is considered private use for this scheme, differing from regular wage tax rules.

There will be a transitional arrangement for existing vehicles. Cars provided to the employee before January 1, 2027, are exempted until September 17, 2030. Cars first made available on or after January 1, 2027, are immediately subject to the levy.

From September 17, 2030, the levy applies to all fossil-fuel passenger cars which can also be used in private, regardless of when they were provided. The levy is applied proportionally if the car is available for part of the year, the penalty tax will then be calculated pro rata. Any partial month counts as a full month.

Note. The measure does not apply to vans or trucks.

Private use addition for new electric company cars
From 2026, new electric company cars are subject to the same private use addition as new non-electric cars: 22% of the catalogue value.

In previous years, the addition for electric cars was gradually increased. The standard 22% addition does not apply to electric cars with integrated solar panels and vehicles running on hydrogen.

Clarification of Bicycle Scheme
When an employer provides a bicycle to an employee and the bicycle is used for private purposes or commuting, a 7% annual addition is applied for the wage taxes.

The government proposes to adjust this addition. If a (shared) bicycle is not or only incidentally (less than 10%) used for commuting to the employee’s home, no addition needs to be applied.

This means no wage or income taxes are due for such usage. This rule can be retroactively applied to 1 January 2020.

VAT rates for culture, sport, media, and lodging
Based on the Budget Day Plans of 2025 the reduced VAT tax rate of 9% on culture, sport, and media as well as lodging would be abolished as per 1 January 2026.

The government proposed that the reduced VAT tax rate of 9% will remain applicable for culture, sport and media.

The previously announced VAT increase for lodging will still be applicable. From 1 January 2026, the general 21% VAT rate will apply to lodging, including:

• Hotels
• Holiday resorts
• Rentals via platforms
• Guesthouses and furnished holiday homes
• Mobile homes and glamping

The 9% rate for lodgings will only remain for camping where the tenant brings their own tent, camper, or caravan.

Corporate Income Tax (CIT) rates will be unchanged
No changes are proposed for the corporate income tax rates and brackets in 2026.

• The lower rate of 19% continues to apply to the first € 200,000 of the taxable profit amount.
• The higher rate of 25.8% applies to taxable profits above € 200,000.

This is consistent with the rates applied in 2024 and 2025.

Reduction of the transfer tax rate to 8%
The government previously established in a legislative proposal that, starting per 2026, the transfer tax rate for properties that are not used as a primary residence will be reduced to 8%. This applies, for example, to holiday homes or second homes and rental property. Earlier this year, an amendment was proposed to further reduce the tax rate to 6%. Unfortunately, the voting on this proposal has been postponed for the time being.

Higher starter tax exemption transfer tax for first-time homebuyer
Starting in 2026, a first-time homebuyer is entitled to an enhanced exemption transfer tax and the tax exemption amount will be increased to €555,000. This is only applicable for homebuyers between the age of 18 to 35 who are purchasing a property for the first time in their life where they actually will be living in themselves.

Addressing unequal shares in a community property regime
Following a Supreme Court ruling, the government proposes that, upon dissolution of a community property regime in which the division of assets deviates from a 50/50 split, the portion received by one spouse exceeding the amount of 50% will be subject to inheritance or gift tax.

The same rule will apply in cases of a final or periodic settlement agreement with a division other than 50/50. This measure applies not only to marriages but also to registered partnerships and notarial cohabitation agreements.

No rebuttal provision is included, and a transitional arrangement applies until 16 September 2025 at 16:00.

Parent-child tax rate and exemption will also be applicable to a biological parent
Following a 2024 Supreme Court ruling, the government proposes to treat biological and legal children equally for gifts and inheritances. As a result, biological children who do not have a legal family relationship with their biological parent will also be entitled to the child tax exemption and the lower gift and inheritance tax rates. The biological child will need to demonstrate the biological parent-child relationship through providing a DNA-test.

Extension period for the filing of the inheritance tax
The filing period for inheritance tax will be extended from eight to twenty months after the date of death. At the same time, the starting point for the calculation of inheritance tax interest will be shifted to twenty months after death. The current eight-month period is often too short for taxpayers to submit a complete and accurate inheritance tax return. If the inheritance tax return is filed after this period, interest on the tax due will be calculated. This also applies in cases where an extension has been granted.