Most inbound mobility managers track every percentage point of the 30% ruling. However, a quieter change to the extraterritoriale kosten regeling now reshapes expat reimbursements. From January 2026, the Belastingdienst narrows which extraterritorial costs Netherlands employers can reimburse tax-free. Therefore, your standard relocation support packages may suddenly trigger payroll tax liabilities. Below, we cover what changed, what stays, and how to audit your expat policies now.
What is the ETK regeling and how does it work?
The ETK regeling lets Dutch employers reimburse incoming employees for actual extraterritorial costs without payroll tax. These are extra expenses an employee incurs purely because they work outside their home country. As an alternative to the 30% ruling, employers pick the 30 ruling vs actual expenses approach each year. They simply choose whichever option delivers more value to the employee. Until recently, the regime covered a broad list of cost-of-living items. However, the Belastingplan 2026 shortened that list significantly. As a result, mobility teams must rethink standard reimbursement packages for inbound talent.
Why the Dutch government narrowed the ETK scheme in 2026
The Ministry of Finance argues that some cost-of-living items already sit inside the employee’s Dutch salary. Specifically, incoming workers earn at least the statutory minimum wage. That wage already reflects local Dutch price levels. Therefore, the government considers double compensation through tax-free reimbursements of extraterritorial costs in the Netherlands unjustified. Consequently, the Belastingplan 2026 added several items to the ETK negative list. Rijksoverheid estimates a net wage decline of around €20 per month for affected workers. Over an average 18-week assignment, that totals roughly €85. The change took effect on 1 January 2026.
Which expenses are no longer tax-free under extraterritorial costs in the Netherlands?
From 2026, two specific categories drop out of the actual extraterritorial costs reimbursement scope. First, extra cost-of-living items like gas, water, electricity, and other utilities. Second, extra private phone call costs to the home country. As a result, employers cannot reimburse these without triggering wage tax. Notably, the change applies only to incoming workers, not outbound assignees. The table below shows what shifts and what stays.
| Cost category | Before 2026 | From 2026 |
| Utilities (gas, water, electricity) | Tax-free | Taxable |
| Private calls to home country | Tax-free | Taxable |
| Double housing costs | Tax-free | Tax-free |
| Home leave travel | Tax-free | Tax-free |
| Dutch language courses | Tax-free | Tax-free |
| International school fees | Tax-free | Tax-free |
How does this affect the 30 ruling vs actual expenses choice?
The narrowing of the extraterritorial costs in the Netherlands makes the 30% ruling vs actual expenses comparison less favourable for actuals claimants. Previously, high-utility households or frequent home callers often beat the 30% percentage with receipts. Now, fewer reimbursable categories means a thinner actual extraterritorial costs base. Therefore, fewer employees will benefit from the actuals route. Mobility teams should rerun calculations annually to confirm the optimal choice. Additionally, employers should document the comparison in the employee file. Otherwise, the Belastingdienst may dispute the chosen treatment during a payroll audit.
What should employers do about expat reimbursement policies now?
Employers should audit every line item in their tax free relocation allowance Netherlands policies. Start by mapping which reimbursements still qualify under the updated ETK scope. Next, identify any utility or phone reimbursements currently flowing through tax-free channels. Then, route those through gross wages or the work costs scheme (WKR) free margin. Finally, brief HR business partners and payroll teams before contract renewals.
A simple action list:
- Audit all current expat reimbursement categories
- Update shadow payroll calculations for affected employees
- Recalculate net pay impact (~€20/month per Rijksoverheid estimate)
- Communicate transparently to affected international hires
- Consider WKR free margin for absorbing newly taxable items
Tax free relocation allowance Netherlands: what still qualifies?
Plenty of items still fall inside the actual extraterritorial costs scope. Double housing costs remain tax-free, as do home leave flights and visa or work permit fees. In addition, Dutch language courses for the employee and family stay reimbursable. School fees for international schools also remain protected. Moving and storage costs continue to qualify. However, every item still requires evidence of actual costs incurred above the employee’s home-country baseline. Therefore, keep receipts and document the comparison properly. Without proof, the reimbursement falls back into taxable wages.
How Octagon helps mobility teams stay compliant
Octagon supports international employers navigating Dutch payroll and expat compliance daily. We audit relocation policies, model the 30 ruling vs actual expenses outcome per employee, and update shadow payroll setups. As a result, your inbound talent stays compensated correctly while you avoid wage tax surprises. We also flag risks around contract clauses and onboarding paperwork. Talk to our team at Octagon Professionals for a tailored review of your ETK exposure before your next international intake.
FAQ
What is the ETK regeling in the Netherlands?
The ETK regeling allows Dutch employers to reimburse incoming employees for actual extraterritorial costs tax-free. It applies to extra expenses tied to working outside the home country. Employees and employers can choose this scheme as an alternative to the 30% ruling each calendar year.
Are utilities still reimbursable tax-free under ETK in 2026?
No. From 1 January 2026, utilities like gas, water, and electricity moved to the ETK negative list. Therefore, employers cannot reimburse these costs tax-free for incoming workers anymore. Employers may still cover them through gross salary or the work costs scheme (WKR) free margin.
Can I still claim phone calls home as extraterritorial costs?
No. Extra private telephone costs to the home country are no longer tax-free under the updated ETK regeling. The Belastingdienst removed this category as of 2026. However, business calls remain deductible through normal expense channels for genuine work-related communications.
Does this change apply to Dutch employees sent abroad?
No. The 2026 narrowing applies only to incoming workers temporarily working in or from the Netherlands. Outbound Dutch employees on assignment elsewhere keep their previous ETK treatment. Always verify which leg of mobility your employee sits on before adjusting any reimbursements.
Should I switch from actuals to the 30% ruling now?
Possibly. Run a fresh comparison each year. With fewer reimbursable categories under actuals, many employees will now find the 30% ruling more advantageous. However, employees with high housing, schooling, or home leave costs may still benefit from documenting actual extraterritorial costs.
