Dutch entrepreneurs are known for their ability to successfully commercialise new opportunities. But maintaining the ability to fund the company while attracting the right personnel is a key point of attention. In the innovative sector, this remains challenging: offering employees a fitting remuneration while continuing to invest in your business.
Our experts discuss the tax schemes that can help your innovative start-up or scale-up.
Rewarding employees with participation schemes
How can a start-up or scale-up maintain a healthy liquidity position while remaining a more attractive employer than the competition? Employee participation schemes may be the answer: part of the employees’ compensation is provided as stock options or future profit rights. Essentially, two birds with one stone: for the company, the cash-out is postponed until later, while the employee gains a financial stake in the company’s success.
Current tax challenges in compensation
There are various forms of employee participation. However, under current rules, employers and employees often face the same problem:
When granting shares
Granting shares as compensation —without exchange or payment— immediately triggers taxation. As an employer, you must pay wage taxes on the value of the shares. So employees pay taxes on the benefit they receive. And employers may face deduction limitations under corporate income tax rules.
When granting stock options
For stock options, taxation often occurs as soon as the option is exercised. A taxable Box 1 benefit is realised “on paper” (at the progressive rate up to 49.5%), even though exercising the option often does not yet lead to any actual income.
These amounts can be substantial. The mismatch between the moment of taxation and liquidity means that stock options are not always an ideal solution for start-ups and scale-ups.
Employee participations in Box 3
Additionally, shares obtained after exercising options are often considered Box 3 assets for income tax purposes: taxed at a high notional yield, even if there is no actual income. Although the current counterevidence scheme may offer a (partial) solution to this problem, the capital gains tax expected to be introduced as of 2028 will create even more problems in such cases, unless further adjustments are introduced.
New proposals: favourable rules for start-ups and scale-ups
The Dutch government has also noticed that our tax legislation lags behind international developments. Therefore, it was announced in 2025 that new rules are to be introduced to support start-ups and scale-ups. This is expected to improve the innovation environment in the Netherlands.
On 16 December 2025, a brief explanation followed. In the Spring of 2026, new legislative proposals are expected (after an online consultation):
a) Postponed levy
Taxation will be deferred until (at the latest) the moment the shares are actually sold (after exercising the option).
b) 35% exemption
Employees of innovative start-ups and scale-ups will receive a 35% exemption on income realised from stock options. This means only 65% of that income will be taxed at the progressive Box 1 rate, making the effective rate comparable to Box 2.
c) New definition and RVO approval
A new definition for start-ups and scale-ups is to be introduced. The Netherlands Enterprise Agency (“RVO”) will assess this and issue a decision valid for 8 years. This decision is a requirement (at the time of granting stock options) for using these schemes. The rules are expected to apply to stock options, issued on or after 17 April 2025, that have not yet left the wage tax regime.
Solution for innovative shares in Box 3
Finally, a solution is proposed for the Box 3 issues. Under the “Actual Return Act” (“Wwr”) which should take effect in 2028, a capital gains tax will apply to equity participations in start-ups and scale-ups (if they fall under Box 3), instead of asset accumulation taxation. In short: tax will be levied on real gains, not paper increases in value.
Taxation on value accumulation (the difference between fair market value and original acquisition price) will therefore only occur when the company no longer qualifies as a start-up or scale-up. There are a few other triggers that may bring this levy forward, such as an IPO or a significant share buyback.
Implementation of the new rules in 2026
The Dutch government hopes that these measures will help restore the Netherlands’ position as a leader in innovation. The legislative proposals and further details are expected in the course of 2026. The scheme is intended to enter into force on 1 January 2027.
Would you like to know more about these developments, about employee participation, or about the services Baker Tilly offers for start-ups and scale-ups? Contact an advisor near you: our experts are happy to help.
The legislation and regulations in this area may be subject to change. We recommend that you discuss the potential impact of this with your Baker Tilly advisor.
