Stock options for employees of innovative startups and scale-ups
Effective tax rate of a maximum of 32.2% and taxation of options from now on no later than upon sale of the shares
The Dutch government has proposed a new tax facility to encourage employee participation. This facility is specifically aimed at employee stock option plans of “innovative startups and scale-ups” and aims to attract talent and promote the growth of these companies. Below are the key points of the proposed facility:
- Reduction of the tax base for wage tax: The tax base of wage income from stock options will be reduced to 65% of the taxable proceeds (the difference between the sale proceeds and the paid exercise price), resulting in an effective tax rate of up to 32.2%. This rate is comparable to the rate of box 2 (top rate 31%). According to the government, this reduction in the tax base will in principle be uncapped.
- Later taxable event: The taxation of options at innovative startups and scale-ups is proposed to take place at the latest upon the sale of the shares. Currently, this occurs at the latest when the shares become tradable or (if chosen) earlier at the time of exercising the option. The choice to pay tax at the earlier moment of exercising the option rights will remain. Possibly, an additional taxable event will be introduced for the employee to pay tax at the moment the employee terminates their employment. For companies that do not qualify as innovative startups or scale-ups, the current legislation for employee options will remain in place.
- Eligible employees: Currently, it is not yet entirely clear which employees will be able to take advantage of this facility. The definition of “innovative startups and scale-ups” will need to be further clarified. The conditions for qualification will relate to: the ways of establishment of the legal entity, the size of the company, the origin of the company, the nature of the activities, and the management of the company. Expectedly, an approval will need to be obtained from the Netherlands Enterprise Agency (NL: Rijksdienst voor Ondernemend Nederland or RVO) to gain the status of innovative start-up or scale-up.
- Start date: Due to the complexity of the legislation, implementation is planned to take place as of January 1, 2027.
It should be noted that in the fluid political landscape, a lot can change between the publication of the spring memorandum and the actual introduction of regulations.
Date: May 7, 2025
Source: EY
