For HR and payroll teams, the year-end process brings a number of important considerations every year. Legislation and regulations continue to evolve, making it important for employers to stay on top of changing rules, deadlines and compliance obligations.
In this article, our Employment Advisory experts outline the key developments and practical considerations for the 2026 payroll year-end and the start of the 2027 payroll year.
Keep a close eye on the Work Related Costs Scheme
In 2026, the first band of the discretionary margin under the Work Related Costs Scheme (WKR) is 2% of the first EUR 400,000 of the wage amount. For the portion of the wage amount exceeding EUR 400,000, the discretionary allowance is 1.18%. The percentage applying to the first bracket is expected to increase to 2.16% in 2027.
Several important WKR provisions are expected to change in 2027. One proposal, for example, would remove the specific exemption for employee discounts on products from the employer's own industry sector, from the WKR. Would you like to stay informed about future developments and make the most of the available discretionary margin? Read more about the rules and our WKR-webinars and training courses here.
Final levy tax for fossil-fuel cars from 2027
From 2027, a pseudo-final levy tax will apply to company cars running on fossil fuels that are made available to employees. The levy amounts to 12% of the list price, or the market value in the case of vehicles more than 25 years old, and is payable by the employer.
A transitional arrangement applies until 17 September 2030 for passenger cars first made available to one or more employees before 1 January 2027. On Budget Day 2026, a proposal was announced to extend this transitional arrangement until 1 January 2031.
The legislation also contains various detailed rules and exemptions governing the application of the pseudo-final levy. Have you not yet assessed the full consequences of this change? Our Employment Advisory experts would be happy to help you minimise the financial impact on your organisation.
Further increase of fiscal addition for electric vehicles in 2027
Electric vehicles continue to benefit from a reduced fiscal addition percentage for the first EUR 30,000 of the list price. In 2026, the percentage is 18%. A percentage of 22% applies to the portion of the list price above EUR 30,000.
The reduced percentage is expected to rise to 20% in 2027, with further phasing-out of the reduced rates in the years ahead. Transitional rules apply to existing contracts.
Read more about the fiscal addition and the tax treatment of company cars in 2026 in our Company Car brochure.
Age threshold for the youngtimer-scheme to increase gradually
Previous legislation created a practical bottleneck within the youngtimer scheme. This had previously been addressed through a policy decision, and on Budget Day legislation was proposed to codify this.
The original plan was to increase the age threshold from 16 to 25 years in one go, as of 1 January 2027. Following a parliamentary motion, the increase will now be implemented more gradually: to 17 years from 2027 and to 20 years from 2028. This way, a structural youngtimer-scheme remains in place, focusing more specifically on older vehicles with higher maintenance costs.
Additional transitional provisions will apply. Vehicles that were already made available to employees no later than 31 December 2025 and that reach the age of 17 in 2027 may continue to benefit from the youngtimer-scheme for the entirety of 2027. From 2028 onwards, the new age threshold of 20 years will apply to all vehicles.
Changes to the expat schemes
The 30%-ruling for incoming and outgoing employees has been scaled back. From 1 January 2027, it effectively becomes a 27% ruling, allowing a maximum tax-free reimbursement of 27% of salary. The salary criteria will also be increased.
Transitional arrangements regarding the percentage of the tax-free reimbursement are in place for employees who already applied the expat scheme during the final payroll period of 2023. Employees who applied the scheme during the final payroll period of 2024 remain covered by transitional arrangements in respect of the higher salary thresholds.
In addition, the final transitional arrangements concerning partially non-resident taxpayer status will expire on 31 December 2026.
Where the 30% ruling was not applied, employers could previously reimburse certain actual extraterritorial expenses (ET costs) tax-free. Since 1 January 2026, certain ET costs can no longer be reimbursed free of tax. These include additional living expenses (the so-called COLA costs) and certain additional private telephone costs.
Favourable rules for innovative start-ups and scale-ups
Innovative businesses meeting specific conditions are expected to be able to apply for a ruling from the Netherlands Enterprise Agency (RVO) from 2027 onwards.
Where qualifying businesses grant employee participation rights, for example share options, the resulting income will receive favourable tax treatment. Taxation of the granted share options will be deferred until ultimately the moment the shares acquired through exercising the options are sold.
Under the proposal announced on Budget Day, 35% of the benefit arising from employee participation arrangements will be exempt from tax from 2027 onwards.
New rules on hiring and lending workers require action now
The Provision of Personnel Accreditation Act (Wtta) will enter into force on 1 January 2027. The legislation introduces a mandatory admission system for businesses that supply workers to third parties. From 1 January 2028, labour suppliers will generally only be permitted to supply workers if they hold a licence or exemption issued by the Dutch Labour Market Authority (NAU). Transitional arrangements apply in certain situations. Hirers will also face new obligations, as they will only be permitted to do business with approved labour suppliers.
Existing labour suppliers should take action now. They may register for the transitional arrangement until 31 December 2026 and must subsequently submit an application for a licence or exemption between 1 May and 30 June 2027. Special arrangements apply to labour suppliers holding a valid SNA quality mark.
The Wtta affects not only temporary employment agencies and secondment providers, but may also impact organisations that only occasionally make staff available to third parties. It is therefore advisable to determine at an early stage whether your organisation falls within the scope of the licensing requirement, whether a statutory exemption applies, and what preparations are necessary.
Read more about what the Wtta means for labour suppliers and hirers.
New Act on greater security for flexible workers
On 7 July 2026, the Dutch Senate approved the Act on greater security for flexible workers. The legislation introduces changes to the rules governing temporary employment contracts, on-call workers and temporary agency work. Most of the changes will take effect on 1 January 2028. Employers should therefore assess in 2027 how the legislation will affect their organisation.
Also pay close attention to the Aof-contributions. In 2027, the percentages are expected to increase by 0.4 percentage points to 8.03% for larger employers and 6.67% for smaller employers. In addition, several objection procedures are currently underway concerning the Aof-levy, including challenges relating to the level of the levy and the use of the proceeds for purposes other than those for which the levy was introduced.
Contact your Baker Tilly advisor if you would like to know more.
Prepare for the Pay Transparency Act
All employers are expected to be subject to new pay transparency legislation from 1 July 2027. The new rules will require far-reaching transparency regarding remuneration, ranging from the recruitment process to periodic pay reporting and individual employee information rights. The aim of the legislation is to identify and reduce unjustified pay differences between men and women.
The applicable reporting obligations will depend in part on the size of the organisation. Mapping the remuneration structure, job grading system and any pay differentials, and implementing any necessary adjustments, takes time. It is therefore advisable to start preparing now.
Our Pay Transparency Quick Scan provides a swift assessment of your organisation's current state of readiness. Contact our Employment Advisory specialists for further information.
Future of self-employed workers remains unclear
The legal framework governing self-employed persons without staff continues to evolve. The so-called VBAR-legislation was intended to replace earlier rules, but a public consultation has since been opened regarding the Self-Employed Persons Act. The objective of this act is to provide greater certainty in advance from 1 January 2028, by means of the introduction of a self-employment test and a working relationship test.
In addition, legislation on an evidentiary presumption was adopted in 2026. The legislation is intended to make it easier for self-employed individuals working at lower hourly rates (up to €38 per hour) to claim employment rights.
False self-employment remains a significant risk. The current legal criteria for determining the nature of working relationships continue to apply for the time being. It is therefore advisable to review the engagement of self-employed workers periodically from both an employment law and tax perspective.
Keep an eye on our website for further developments or ask your Baker Tilly advisor for an update.
Income tax credit no longer applied to UWV benefits paid through the employer
The tax treatment of certain benefits paid by the Employee Insurance Agency (UWV) through employers will change from 1 January 2027. The employment tax credit may no longer be applied to the benefits element. For employees receiving such benefits through their employer, this may result in lower net pay. Please contact your Baker Tilly HR or payroll advisor if you would like to know more about the consequences or administrative processing of this change.
Want to know more?
Would you like to learn more about the key issues employers should consider during the 2026 payroll year-end and the start of the 2027 payroll year? Our Year-End Pointers provide an overview of many important topics.
Do you have any other questions? Our advisors would be happy to assist you.
Legislation and regulations in this area may change. At the time of publication, the 2027 Tax Plan had not yet been debated by the House of Representatives or the Senate. Legislative or other changes may have taken place after the publication of the articles mentioned above. Talk to your Baker Tilly advisor about the potential impact for your organisation.
