Start-ups and Scale-ups (Tax Incentives) Act

Introduction

On 15 September 2026, the government submitted the bill on tax incentives for start-ups and scale-ups to the House of Representatives. The government says Dutch start-ups and scale-ups, which category of companies is particularly important for innovation, growth and, as a result, for the future earning capacity of the Dutch economy, are underperforming compared with other European countries.

Start-ups and scale-ups often use share options to attract and retain staff. Nevertheless, compared with many other countries, in the Netherlands the tax burden on share options granted to employees is relatively high. This prompted the government to propose the introduction of a wage tax relief scheme for share options granted to employees of start-ups and scale-ups, with effect from 1 January 2027. As a transitional law, the scheme will also apply to qualifying options granted on or after 17 April 2025, provided that these have not yet ceased to be treated as part of the employee’s wages as at the end of 2026. Shares or options that qualify as a lucrative interest or a substantial interest, on the other hand, are excluded from the scheme.

Share options in start-ups and scale-ups

The current statutory scheme for share options provides for the deferral of wage taxes until the date on which the options are exercised, or the later date on which the shares acquired as a result of exercising the options become marketable. Under the new scheme, however, for share options in start-ups and scale-ups the tax is deferred until the actual sale of the shares acquired by exercising the options, although the employee may opt for one of the earlier dates of taxation referred to above (provided this is indicated in a timely manner).

The main proposed measure is a 35% reduction in the taxable base to be taken into account for wage tax purposes. Hence, only 65% of the wage benefit – i.e., the difference between the proceeds from the disposal of the shares and the option exercise price – is taken into account. The tax burden reduction is thus capped at 32.2%. The reduction also applies to benefits derived from the shares (such as dividends minus costs) during the period in which the shares are still considered part of the employee’s wages.

The reduction does not apply to the extent that the share option right’s exercise price is lower than the value of the underlying shares when the option right was granted. In this respect, for employees who take up residence in the Netherlands and who have qualifying share option rights, the market value of the shares on the date of immigration applies.

Definition of business start-up and scale-up

The scheme is subject to various conditions. Firstly, the Netherlands Enterprise Agency (Rijksdienst voor Ondernemend Nederland, or ‘RVO’) must have issued a decision establishing that it concerns a start-up or scale-up. This decision is valid for eight years and may be extended for a maximum of three times, for five years each. A new statutory definition has been proposed for this purpose. In short, this must concern a withholding agent:

1. which conducts a business aimed at rapid growth through a scalable and repeatable business model rooted in innovation;
2. whose shares or profit-sharing certificates are not traded on a regulated market; and
3. in which no shares are held, either in law or in fact, directly or indirectly, to an extent exceeding 25% by an entity whose shares are traded on a regulated market.

A ‘scalable and repeatable business model’ is the capacity of an enterprise to achieve rapid revenue growth by using technology that leads to lower marginal costs and economies of scale. Innovation concerns technical renewal or significant functional improvement relative to the industry.

Other conditions

It must concern a qualifying share option right, which is subject to the following conditions:

• The employer and employee must agree in writing that the shares acquired through the exercise of the share option right may not be alienated for the first time until two years after it has been granted, unless there is an earlier sale or IPO.
• The disposal of the shares requires the approval of the withholding agent and all relevant details must be recorded and retained in the payroll records. This is necessary to enable the (former) employer to pay wage tax and national insurance contributions, even if the employee is no longer employed by that employer at that time.
• The scheme does not apply if the share option right or the share qualifies as a lucrative interest or a substantial interest for the employee on the date of granting the option right or thereafter.
• The option right must have been granted by a withholding agent which, on the grant date, qualifies as a small, medium-sized or micro-company under the General Block Exemption Regulation (Algemene Groepsvrijstellingsverordening, or ‘AGVV’). The criteria are that such enterprises should employ no more than 250 persons, their annual turnover should not exceed EUR 50 million and their annual balance sheet total should not exceed EUR 43 million. An exception applies when the conditions set out in the de minimis Regulation are satisfied (the amount of the aid per enterprise does not exceed EUR 300,000 over a three-year period).

Qualification no longer applies

When a withholding agent no longer qualifies as a start-up or scale-up, or has been put into liquidation, this must be reported to the Netherlands Enterprise Agency within four weeks; the decision previously issued will then be revoked. Non‑compliance may result in a fifth-category fine (2026: up to EUR 110,000).

The Netherlands Enterprise Agency may also revoke the decision on its own initiative when it appears plausible that the entity is no longer a start-up or scale-up, or when the information provided in the application was incorrect or incomplete to the extent that a different decision would have been taken, had the correct facts and circumstances been known.

If the conditions for applying the scheme are no longer satisfied, settlement does not always have to take place immediately: in such cases, the main rule applies, with taxation taking place upon exercise of options or at the later point in time when the shares become marketable (Article 10a of the Wages and Salaries Tax Act 1964 (Wet LB 1964)). For the period during which a qualifying option right existed, the relief may be applied on a pro-rated basis..

Special cases

• Where the option right itself is sold, tax must be paid immediately on the difference between the sales proceeds and the exercise price. In that case, no reduction on the tax base is granted.
• If the employee emigrates, tax is levied on the market value. In that case, however, a protective assessment is imposed and the tax collector grants an extension of payment.
• Finally, a provision has been made for a scheme as part of a disposal in the context of a share‑for-share merger, demerger or acquisition of more than 50% of the shares in a start-up or scale-up. In such cases, the facility may be continued under certain conditions.