Boost for Dutch startups and scale-ups

On the Friday before Easter it was announced that the Cabinet plans to give Dutch startups and scale-ups a helping hand with favorable(er) tax conditions for employee participation. This should make it more attractive for (potential) employees of these companies to start or stay there.

This scheme should contribute to an internationally competitive ecosystem for startups and scale-ups in the Netherlands. Minister Beljaarts (Economic Affairs): “A tax scheme for employee participation is a long-cherished wish and a real gamechanger for startups and scale-ups. With this, the Netherlands improves its position in the European leading group of countries with the best ecosystems for startups and scale-ups.”

What will change?

Under the new tax regime, two important changes will be made to the taxation of stock options for employees of these companies. It involves adjustment of the tax rate as well as a shift in the time of taxation.

Where currently the standard rate of 49.5% in box 1 still applies, a maximum rate of 32.17% will soon apply. In addition, the time of taxation will shift: instead of at the time the shares are tradable, taxation will only take place at the time of sale. International comparative research shows that the Netherlands lags behind other countries with the current regime. The bill detailing these changes is in preparation. The intended effective date is January 1, 2027.

How does employee participation work in practice?

Employee participation is often used as an instrument to financially reward employees while allowing them to directly share in the success of the company. Motives for this can be the long-term commitment of talented employees, the promotion of performance and productivity and/or the strengthening of loyalty within the organization.

In a previous article, we explained how this can be designed (legally speaking). For example, by issuing certificates on shares that give employees profit rights. This can be done by establishing an administration foundation. Here we explain exactly how this works.

Advice

Are you an entrepreneur and curious about the (legal) possibilities of offering this form of employee participation? Contact a us by email, phone or fill out the contact form for an informal conversation. We gladly think along with you.