On 18 April 2025, the Dutch Cabinet presented the Spring Budget (Voorjaarsnota 2025), which included several pivotal fiscal announcements. Among them is a particularly welcome development for fast-growing businesses: a proposed new tax regime to make employee stock options more attractive for qualifying start-ups and scale-ups. This move, long awaited by the innovation community, is part of a broader government effort to strengthen the business climate and attract top-tier talent in an internationally competitive landscape.
Supporting Growth: The Strategic Importance of Employee Participation
The Netherlands is a country with an entrepreneurial spirit and a high density of start-ups and scale-ups. However, international rankings show the country underperforms when it comes to scaling those businesses successfully. One significant barrier to growth is the challenge of attracting and retaining talent, particularly in the critical early stages of business development.
Young companies often need to reinvest every available euro into R&D and product-market fit, which limits their ability to offer competitive salaries. As a result, employee participation schemes—such as stock options—have long been used as an incentive to attract skilled professionals who believe in the company’s mission and are willing to share in its risk and reward.
The New Regime: Tax Relief on Stock Options for Innovative Companies
The Cabinet’s proposal aims to ease the tax burden on employee stock options for qualifying innovative start-ups and scale-ups. Under current legislation, the value of exercised stock options is taxed in Box 1, at progressive income tax rates up to 49.5%. Tax is due once the shares become tradable or—if opted for—already at the time of exercise. This creates two major obstacles:
- The high tax rate is a disincentive.
- Employees may owe tax before having realized any cash benefit from the shares.
By contrast, the proposed reform offers two major improvements for qualifying start-ups and scale-ups:
- Tax Base Reduction: Only 65% of the realized gain on stock options will be treated as taxable wage income, bringing the effective tax rate down to ~32.2%, similar to the top rate in Box 2 (31%).
- Deferral of Taxation: The taxable moment shifts from the time the shares become tradable to the actual moment of sale, solving the liquidity issue for employees.
A third element, still under consideration, would allow employees to choose to be taxed upon termination of employment, adding further flexibility.
To access this regime, companies will likely need to obtain a formal ruling or designation from the Netherlands Enterprise Agency (RVO). The precise eligibility criteria for “innovative start-ups and scale-ups” will be defined at a later stage.
Historical Background: From Boom to Burden
Stock options were particularly popular during the early 2000s tech boom, when developers and early hires were often rewarded with options that became highly valuable after IPOs or acquisitions. However, concerns about under-taxation prompted legislative changes that eroded their fiscal attractiveness. In later years, alternative instruments like restricted stock units (RSUs), phantom shares, or certificates taxed in Box 3 gained popularity—though not without limitations.
For instance, if an employee holds a lucrative interest (i.e. a structurally advantageous stake with certain rights), any gains fall back into Box 1, potentially undermining the benefits. In certain cases, planning into Box 2 remains an option, but this requires a careful legal and fiscal structuring.
Still Some Hurdles Ahead
Despite the promising new measures, not all constraints are lifted. The corporate income tax (CIT) treatment of stock option expenses remains restricted; there is no announced change in the non-deductibility of these costs for the employer. For some companies, this means that the combined burden of wage tax and non-deductible costs may still be high. In such cases, alternative arrangements—such as Stock Appreciation Rights (SARs)—may still be more efficient, depending on the overall remuneration strategy and the lifecycle stage of the company.
Implications for Employers and HR Strategy
This reform acknowledges the importance of creating a fertile ecosystem for innovation. Research cited by the Cabinet shows that companies offering employee ownership schemes grow three times faster than those that do not. Stock options also serve as a retention mechanism, as employees must typically remain with the company for several years before the options vest.
While the formal introduction of the regime is planned for 1 January 2027, companies should already start preparing:
- Review and redesign equity incentive plans to align with the upcoming rules.
- Seek early qualification or RVO recognition as soon as the legislation is published.
- Assess whether Box 3, Box 2, or SARs offer better overall fiscal outcomes for non-qualifying companies.
Conclusion: A Step Forward for the Dutch Innovation Climate
This announcement is a positive development for the Dutch innovation landscape. By easing the tax burden on stock options for start-up and scale-up employees, the Netherlands takes a step toward reestablishing its appeal as a top-tier location for tech talent and entrepreneurship. As the Netherlands slipped from 5th to 9th place in the IMD World Competitiveness Rankings, policies like this one are crucial to reversing the trend and driving long-term productivity and social value.
Ongoing Uncertainties Regarding the New Tax Scheme
Although the government has made a preliminary decision to introduce this reform, the precise details of the new scheme are still under development. Key aspects remain uncertain, including which companies will be eligible, whether the rules will apply to both shares and stock options, and the applicable tax rate upon realization.
These critical details are anticipated to be released later this spring. Given the potential implications for startups and their employees, we are actively monitoring these developments and will continue to provide timely updates as new information becomes available.
Summary
The proposed new tax regime for stock options in the Spring Budget 2025 marks a strategic shift in how the Dutch government supports innovative entrepreneurship. It lowers the effective tax rate, defers taxation, and increases flexibility for qualifying employees. While further guidance and definitions are expected, the direction is clear: the Netherlands aims to make equity compensation competitive again—both at home and on the global stage.
Disclaimer & Advisory
Tax-efficient remuneration planning is complex and requires tailored advice. We are happy to assist you in identifying the opportunities that align with your company’s structure and goals.
Having a trusted advisor makes all the difference. If you have questions about doing business in the Netherlands —or would like to explore how we can support your business? Feel free to contact one of our specialists at info@nexiadhw.nl. They will be happy to explain our services to you.
The content provided on this memorandum is intended solely for general informational purposes and should not be construed as professional tax advice. Nexia DHW disclaims any responsibility for any actions taken or decisions made based on the information presented on this website. Users are encouraged to seek personalized advice from a qualified professional before making any financial, tax, or legal decisions.
