Upcoming legislative change: The Netherlands promises improvement in the tax treatment of employee stock options

The Dutch legislator is working on a new tax regime for employee stock options, with planned implementation as of 2027. Startups, scale-ups and fast-growing SMEs will have better opportunities to allow employees to share in the company’s success. With these proposed changes, the Dutch government aims to remove tax obstacles to employee participation and align more closely with startup-friendly jurisdictions such as France, Estonia, and the United Kingdom.
These changes are part of an amendment to Dutch tax legislation specifically targeting the treatment of stock options in employment relationships.

What are the proposed changes?

Currently, income tax is levied at the moment stock options are exercised – often before the employee has actual liquidity to pay the tax. A reform introduced in 2023 allowed some deferral of taxation until the shares became tradeable. However, in practice, this proved insufficient for many startups. Especially in structures involving a Dutch trust foundation (STAK), shares are often not freely tradeable or their tradability is hard to establish.

In the Dutch 2025 Spring Budget Memorandum (Voorjaarsnota), the government announced several significant reforms to the fiscal treatment of stock options granted by startups and scale-ups:

1. Deferral of taxation until sale of shares:
   Currently, taxation occurs when the shares become tradeable, which can result in tax obligations before any actual gains are realized. The new proposal shifts taxation to the moment the employee actually sells the shares, meaning tax will only be due when cash proceeds are available. This measure is intended to align better with liquidity events and reduce upfront tax burdens under Dutch wage tax law.
2. Reduction of the taxable base:
   Only 65% of the benefit (the difference between the sale price and the strike price) will be considered taxable income. While the income remains taxable in Box 1 of the Dutch Income Tax Act (progressive employment income tax), this change results in an effective maximum tax rate of approximately 32.17% (65% of the gain taxed at a maximum rate of 49.5%). This is significantly lower than the current situation, where the full benefit is taxed at the top progressive rate. This change is also part of the Dutch legislative proposal and will apply to qualifying startups and scale-ups.
3. Effective date and target group:
   The new rules are expected to enter into force on 1 January 2027, and are intended to apply to innovative startups and scale-ups. The precise eligibility criteria for companies will be defined in further legislative detail. These eligibility rules will be part of secondary Dutch legislation or policy decrees yet to be published.

These changes are designed to make stock option plans easier and more attractive for both employers and employees. For the Dutch innovation sector, this is crucial: a competitive regime for employee participation fosters innovation, talent retention, and international positioning.

Option holders remain in Box 1: entrepreneurial risk, without entrepreneurial treatment

Employees participating via stock options are taxed under Box 1 of the Dutch Income Tax Act. This means that the benefit – either upon exercise or, under the new rules, upon sale – is treated as employment income. Although the proposed reform introduces deferral until liquidity arises, the income remains subject to progressive taxation.

This approach does not fully reflect the fact that employee options often represent a form of entrepreneurial risk capital. In contrast to entrepreneurs or investors, option holders do not benefit from the lower rates applicable in Box 2 (substantial interest income) or Box 3 (passive income from savings and investments).
A broader fiscal recognition of the risk-bearing nature of employee options – for example through a differentiated tax treatment in specific cases – could further enhance the attractiveness of stock option schemes. This critique is aimed at the current Dutch income tax structure, which maintains a strict distinction between employment income and entrepreneurial income.

International comparison

With these proposed amendments, the Netherlands is moving closer to jurisdictions such as the United Kingdom, Estonia, and France, where employee stock options are treated more favourably from a tax perspective. In the UK, for example, Enterprise Management Incentive (EMI) schemes allow options to be taxed upon sale at a favourable capital gains rate of 10%, rather than as employment income.
Such frameworks make employee participation more appealing to both employers and talent. The proposed Dutch changes help Dutch startups compete more effectively in an international labour market. 

Blenheim Advocaten advises on employee participation

Blenheim Advocaten has extensive experience advising on employee participation schemes and stock option plans. We regularly assist entrepreneurs, investors, and startups with the legal and tax structuring of participation models. We have previously written about this topic in the following blog posts. These publications are part of Blenheim’s broader thought leadership on Dutch employee equity structures:

• Developments in Employee Stock Option Participation in the Netherlands
• Stock Appreciation Rights (SARs) – The advantages for employers

With the proposed changes, it is essential to anticipate the new regulations in a timely manner. We are ready to assist you in setting up or restructuring employee participation plans that align with the upcoming tax reforms. Are you considering implementing an employee stock option plan? Or would you like to understand how the announced legislative changes may affect your organization?

With our expertise in designing and guiding employee participation structures, we are happy to assist. Feel free to contact our team for tailored legal and tax advice. We support you in the structuring, implementation and legal documentation of a practical and tax-efficient stock option plan under Dutch law.