Dutch Tax Plan 2026

On September 16, 2025, Dutch Budget Day (Prinsjesdag), the Dutch caretaker government (demissionair kabinet) released its tax plan for 2026 and some other tax-related legislative proposals. In this publication, we will highlight the most important topics thereof and also take the opportunity to discuss some other notable tax developments for 2026. We note that the proposals are less significant than in some previous years, which may in part be attributed to the circumstance that the Netherlands currently has a caretaker government and that general elections are scheduled for October 29, 2025.

1. Introduction

On September 16, 2025, Dutch Budget Day (Prinsjesdag), the Dutch caretaker government published its tax plans for 2026 (Belastingplan 2026) (Tax Plan) and some other related legislative proposals. The Tax Plan includes various, mostly incremental, tax proposals relevant to the (international) business community. It includes, among others, adjustments to the lucrative interest incentives regime in box 2 (income from a substantial interest) and a bill implementing the latest Administrative Guidelines published by the OECD in the Dutch Minimum Tax Act 2024 (Wet minimumbelasting 2024) (Pillar 2). 

The Tax Plan also includes proposals to reverse previously adopted changes that were to enter into force on January 1, 2026, such as a proposal to maintain the reduced Dutch value added tax (omzetbelasting) (VAT) rate on culture, media and sports. 

In this publication, we discuss the legislative proposals that are most relevant to the (international) business community. Most provisions of the Tax Plan and related proposals are supposed to enter into force on January 1, 2026; if later, we specifically mention this. The Tax Plan is a legislative proposal and therefore subject to amendments and changes. 

In addition, we also briefly discuss some other tax-related developments that could impact the (international) business community. These were published or announced earlier this year. Several studies have and are being conducted on the effectiveness and efficiency of tax schemes. For example, the government aims to improve the environment for startups and scale-ups and plans to introduce a new tax scheme that will stimulate employee participation. In addition, this summer, the former State Secretary of Finance informed the Second Chamber of Parliament (Tweede Kamer) about further legislative possibilities to counter dividend stripping. 

The Tax Plan is published here. 

2. Corporate Income Tax 

2.1 Technical adjustment thin capitalization rules for banks and insurers

The minimum capital rule (also known as the thin capitalization rule) in the Dutch Corporate Income Tax Act 1969 (Wet op de vennootschapsbelasting 1969) (CITA) limits interest deductibility for banks and insurers. Many banks and insurance companies manage liquidity centrally by lending surplus cash between group entities through an internal treasury, thereby reducing external borrowing. The thin capitalization rule was previously amended so that, subject to certain conditions, interest on intra-group liquidity loans remained deductible. However, the exception unintentionally also covered loans directly connected to funding obtained from individuals (i.e. retail clients). This was not intended. The Tax Plan proposes a technical correction: loans that are directly linked to individual-sourced funding are excluded from the internal liquidity management exception, and the related interest will be taken into account in determining the non‑deductible interest under the minimum capital rule.

2.2 Transitional regime for tax transparent funds

The Tax Plan introduces a temporary transitional regime for certain funds that were and are intended to be tax transparent but which might become tax opaque, possibly only temporarily, due to recent changes in law. This measure responds to practical issues arising from the new rules regarding the tax classification of legal entities and partnerships, and in particular the revised definition of Dutch funds for joint account (fonds voor gemene rekening) (FGRs) and comparable foreign entities and partnerships, effective January 1, 2025. Following these new rules, previously tax transparent funds could qualify as non-tax transparent funds for Dutch corporate income tax (vennootschapsbelasting) (CIT), Dutch dividend withholding tax (dividendbelasting) (DWT) and Dutch conditional withholding tax (bronbelasting) (CWT) purposes as of January 1, 2025. Even a Dutch limited partnership (commanditaire vennootschap) (CV) and comparable foreign entities and partnerships, which should in principle qualify as a tax transparent entity based on the new rules, could be classified as an FGR (or comparable foreign entity) and therefore be taxable as a non-tax transparent (opaque) fund. 

Based on the proposed rules, funds that were tax transparent up to 2025 may choose not to be classified as an FGR (or comparable foreign entities and partnerships) for Dutch tax purposes from January 1, 2025, provided that (i) the fund would, under the new rules, become subject to CIT as an FGR from 2025, (ii) immediately before 2025, the fund was tax transparent and its assets, liabilities, income, and expenses were attributed to its participants; and (iii) if the participations in the fund can be transferred to other participants (and not only to the fund (by means of redemption and/or (re)issuance)), all participants consent to the opt-out by February 28, 2026. 

Funds opting for this regime remain transparent for Dutch tax purposes as was the case before 2025. The transitional regime applies until January 1, 2028, or earlier should the FGR definition be amended before that time following the ongoing review of the FGR regime (reference is made to the letter of the Dutch Chamber of Parliament of June 12, 2025) 

These proposed rules provide for some additional flexibility for funds that were faced with, in our view, unintended consequences of a set of new rules, which were basically intended to align the Dutch entity classification rules with international standard, but which have actually made the Dutch entity classification landscape more complex than ever.

3. Dutch Minimum Tax Act 2024 (Pillar 2)

3.1 Adjustments and clarifications to the Dutch Minimum Tax Act 2024

The Dutch Minimum Tax Act 2024 entered into effect on December 31, 2023. It implements the Pillar 2 directive and introduces a minimum level of taxation for a multinational enterprise (MNE) with annual consolidated revenue of EUR 750 million or more in at least two out of four fiscal years immediately preceding the tested fiscal year. The Pillar 2 directive is based on the OECD Pillar 2 GloBE Rules and is therefore largely consistent with these rules. Since 2023, the OECD Inclusive Framework (IF) has provided several sets of Administrative Guidelines to provide additional guidance relevant to the interpretation and operation of the Pillar 2 GloBE Rules. Most sets of the Administrative Guidelines are already codified in the Dutch Minimum Tax Act 2024. The Tax Plan proposes to incorporate the remaining sets and elements of the Administrative Guidelines into the Dutch Minimum Tax Act 2024. In addition, some technical improvements will be made.

Most changes will apply retroactively from December 31, 2023, or with respect to one provision, from December 31, 2024.  However, there are also some provisions that will only take effect from December 31, 2025.

3.2 Implementation of the EU directive on exchange of information in respect of Pillar 2 top-up tax returns

Companies that fall within the scope of the minimum tax are required to submit a top-up tax information return, consisting of a set of documentation, to the relevant tax authority. This information return must be filed in every member state where the MNE is established. For such companies, this results in an increased administrative burden. In the Netherlands, the first top-up tax information return for the year 2024 must be filed on June 30, 2026, ultimately.

The most recent amendment to the directive on administrative cooperation in the field of taxation, the ‘Directive on Administrative Cooperation’ (DAC), aims to reduce the administrative burden of filing such information returns in every member state where the MNE is established. This latest amendment – DAC9 – provides that the MNE needs to submit an information return with information of all relevant jurisdictions in one member state only. The directive must be enacted into national law by January 1, 2026. The Tax Plan therefore introduces a bill to timely enact these changes.

4. Real estate transfer tax and value added tax

4.1 Reduction of real estate transfer tax rate for investors in residential property

As proposed in the 2025 tax plan, the Dutch real estate transfer tax (overdrachtsbelasting) (RETT) rate for residential property investors (whether through an asset or share deal) shall be reduced from 10.4% to 8% as of January 1, 2026. The RETT rate in relation to the acquisition of residential property for personal use will remain at 2% whereas a reduced rate of 0% continues to apply for certain new entrants to the Dutch residential market. Further, RETT will continue to be levied at a rate of 10.4% for acquisitions of Dutch non-residential real and for certain rights concerning such property (including qualifying shareholdings in Dutch real estate rich companies). A newly introduced rate of 4% applies to certain newly built real estate acquired in the context of a share deal. 

4.2 Introduction of annual value added tax revision rules for real estate related services and increased value added tax rate on short stay

As introduced by the 2025 tax plan and as also provided for in the EU VAT Directive as an optionality, a VAT revision period of five years shall apply in relation to certain immovable property services, such as renovations, repairs, and (major) maintenance to the extent these services cost at least EUR 30,000. Currently, this revision period applies to the supply or construction of (new) real estate only and not to services. This change will only be relevant for services that have not been absorbed in the construction of a newly built real estate property, since a VAT revision period would already apply thereto de facto. As a result of the change, if the VAT use of a renovated property changes during the five year period, e.g. from taxable short stay lease to exempt lease, this may result in an obligation to (wholly or partially) repay previously recovered VAT or, vice versa, to an additional right to recover VAT. 

Additionally, last year’s proposal to increase the VAT rate for accommodation (e.g. short hotel stays) will take effect as of January 1, 2026, resulting in such services being subject to the 21% VAT rate going forward. Reservations and payments made in 2025 for accommodation in 2026 will already be subject to the 21% rate.

4.3 No increase of value added tax rate on culture, media and sports

Last year’s tax plan introduced an increase of the reduced VAT rate on culture, media and sports as of January 1, 2026. This year’s Tax Plan reverses this planned increase in VAT rate on culture, media and sports and, as such, the reduced VAT rate will remain applicable. 

5. Dividend stripping

Dividend stripping involves a complex of tax-driven transactions in relation to Dutch shares or dividend entitlements with the predominant aim of reducing or avoiding the Dutch dividend withholding tax burden. The essence of dividend stripping is that the economic exposure to the relevant Dutch shares or dividend entitlement before and after the dividend record date does not change while the dividend arises at the level of a person with a better Dutch dividend withholding tax profile than the ultimate beneficial owner. 

Dividend stripping occurs in practice in various guises and often involves a diverse, opaque, and complex sequence of transactions involving various parties. As a result, dividend stripping is difficult to trace and prove for the Dutch tax authorities (DTA). Over the last years, the DTA have intensified their enforcement efforts against dividend stripping transactions. This has resulted in several settlement agreements with taxpayers and ongoing litigation concerning significant amounts of Dutch dividend withholding tax. As of January 1, 2024, several key measures to combat dividend stripping have come into effect. As proposed in last year’s tax plan, the record date for the dividend entitlement is now formally defined in the Dutch Dividend Withholding Tax Act 1965 (DWTA 1965). In addition, the burden of proof regarding the beneficial entitlement to dividends and consequently, the burden of proof in relation to the entitlement to dividend withholding tax relief, has shifted to the taxpayer (with a de minimis exception for dividends up to EUR 1,000).

In a letter dated 27 June 2025, the Dutch government has announced that it is exploring further legislative options to avoid dividend stripping, with a focus on the practical application for the DTA and market parties, market impact, and compatibility with EU law and tax treaties. In that context, various routes are considered, including a net return approach (which denies benefits if the net return falls below a certain threshold), specific measures targeting pension funds, rules focusing on group structures set-up with the aim of using Dutch dividend withholding tax exemptions and minimum holding periods as already applied in other jurisdictions. 

The government intends to further explore and publicly consult these measures. After such consultation, the government may assess and decide on potential legislation, aiming to avoid overlap and excessive layering of measures. 

The potential new rules may also affect parties involved in the bona fide trade of equity instruments and derivatives, such as brokers and custodians. Pension funds and group structures may face additional compliance requirements. Ongoing developments at both the national and EU level, such as the implementation of the FASTER Directive that aims to harmonize and expedite procedures for reducing withholding tax and preventing abuse, will require close monitoring and may require adjustments to operational procedures and tax compliance frameworks.

6. Employment 

6.1 Expat facility and partial foreign taxpayer status

Certain costs that employees from outside the Netherlands must make in the context of their employment in the Netherlands can be reimbursed free of tax (the so-called 'extraterritorial costs'). Extraterritorial costs can either be reimbursed based on actual costs made, or, under certain conditions, parties can also opt to apply for the 'expat facility'. Under the expat facility, a tax-free allowance of currently 30% of an employee’s Dutch-sourced remuneration can be granted to qualifying incoming expatriates employed by a Dutch employer. As part of the 2025 tax plan, the percentage will be lowered to 27% as of January 1, 2027. 

In addition to earlier cutbacks, this year's Tax Plan now proposes to tighten the tax-free reimbursement of actual extraterritorial costs made. This tightening entails that, as of 2026, the additional costs of living, including expenses for gas, water, electricity, and other utilities, as well as additional communication costs for private purposes with the country of origin, can no longer be reimbursed free of tax. 

It is also noted that as of January 1, 2025, expats can no longer opt to be treated as partial foreign taxpayers for Dutch income tax purposes. Under the partial foreign taxpayer rules, expatriates using the expat facility and living in the Netherlands, can largely remain outside the scope of Dutch taxation on income from substantial interest holdings (box 2) and income from savings and investments (box 3), as only the income and gains from real estate located in the Netherlands and the income and gains from shares of a legal entity established in the Netherlands are included in the Dutch income tax base. A grandfathering rule still applies in relation to expats that have already applied for the expat facility at the end of 2023. These expats are allowed to retain their status of partial foreign taxpayer until December 31, 2026 at the latest. 

6.2 Clarification criteria for assessing employment relations

On July 7, 2025, the final bill of the Act on Clarifying Assessment of Employment Relationships (Wet verduidelijking beoordeling arbeidsrelaties en rechtsvermoeden) was sent to the Second Chamber of Parliament. The bill clarifies the distinction between self-employed persons and employees and introduces a legal presumption of an employment contract based on an hourly rate. If the hourly rate is below EUR 36, the presumption of an employment contract applies. This rate will be indexed bi-annually. This bill serves two main objectives: reducing false self-employment and providing a clear assessment framework so that workers and employees have more clarity about their legal status. In this context, it was decided not to introduce new criteria; the bill is supposed to be a codification of existing case law. The bill is scheduled to enter into force on July 1, 2026. There is, however, no certainty that this timeline will actually be met due to the upcoming elections at the end of October. Although we welcome any attempt to clarify the legal framework regarding the classification of working relationships, in practice we do not expect this bill to end all uncertainty. Therefore, we strongly recommend all involved parties to keep monitoring developments in the coming period and to critically assess if and to what extent they are exposed to requalification risks, in particular as the enforcement moratorium has been abolished since January 1, 2025. 

6.3 Startups and Scale-ups 

In the Dutch government’s Spring Memo 2025 (Voorjaarsnota 2025), a new tax scheme was announced for employee share option rights granted by innovative startups and scale-ups. It aims to contribute to the success of more startups and scale-ups in the Netherlands by enabling them to attract and retain talent more effectively. The tax scheme should result in lower payroll taxes for employees of startups and scale-ups on income from stock options by narrowing the tax base for stock option income to 65%. As a result, the maximum effective rate on income from qualifying stock options would decrease from the current (up to) 49.5% to approximately (up to) 32%. In addition, the announced scheme provides for an election to be taxed only upon the actual sale of shares or upon termination of the employment. The definition of an ‘innovative startup or scale-up' is expected to be aligned with the definition of startups and scale-ups to be introduced in the future box 3 system as of 2028. Currently, a process is underway with the Netherlands Enterprise Agency (RVO) to explore whether the RVO can play a role in determining whether a company qualifies as an innovative startup or scale-up. Based on the letter of the State Secretary of Finance, dated June 2, 2025, we expect that in order to qualify as innovative startup or scale-up, a company should meet the following four cumulative conditions:

1. The Company is innovative and engages in scalable business activities;
2. It can demonstrate the steps required to achieve these scalable activities and growth through a growth plan;
3. The Company has the legal form of a limited liability company (besloten vennootschap), public company (naamloze vennootschap), or a comparable European legal entity; and
4. It is not insolvent or in bankruptcy and it has appropriate solvency and liquidity for an innovative company with scalable business activities.

The caretaker government expects that it (or the new government) will submit a bill in the first quarter of 2026. The intended effective date is January 1, 2027.

6.4 Pseudo-final levies

Pseudo-final levies (pseudo-eindheffingen) are special payroll tax assessments imposed on Dutch employers for certain types of employee benefits or payments. Unlike regular payroll tax, these levies are not withheld from the employee’s salary but for the account of the employer and so are paid directly by the employer as a final tax. The purpose of pseudo-final levies is to discourage undesirable remuneration practices and to ensure that certain payments are taxed at a higher, final rate.

There are currently two types of pseudo-final levies, being the pseudo-final levy on excessive severance payments and the pseudo-final levy for early retirement schemes (the latter often referred to as the ‘RVU levy’). Under the RVU-levy, if a leaving employee is granted payments that de facto serve as funds to bridge the period until the legal retirement age (or come in addition to pension payments), a tax levy of 52% could be due by the Dutch employer. Until the end of 2025, a threshold exemption is available insofar the early retirement payment is made within 36 months before the legal retirement age and the total gross payment does not exceed EUR 2,273 per month or EUR 27,276 per year. The Tax Plan now proposes to retain this threshold exemption after 2025. To avoid adverse budgetary effects of retaining the threshold exemption, it is proposed to gradually increase the RVU levy rate from currently 52% to 65% in 2028 (57.7% in 2026 and 64% in 2027). 

Furthermore, the Tax Plan proposes to introduce a new pseudo-final levy for the private use of fossil fuel company cars. For this purpose, a fossil fuel car means a car that is not entirely emission-free, and the definition of use for private purposes also includes the commute between home and work. The proposed rate is 12% of the catalog price of the car. As with the other pseudo-final levies, this tax is imposed on the employer and cannot be recovered from the relevant employee. The new pseudo-final levy will be due as of January 1, 2027 for fossil fuel cars that are made available to employees by the employer for the first time on or after that date. If an employer has made a car available to one of its employees prior to 2027, a transitional period will apply until September 17, 2030.

7. Individual income tax

7.1 Individual income tax rates

Every year, the government applies a statutory inflation adjustment to ensure that the tax system reflects changes in the cost of living. To find budgetary coverage for not increasing the reduced VAT rate on culture, media and sports as of January 1, 2026, the inflation compensation applied to the progressive tax brackets and tax credits in the Dutch Individual Income Tax Act 2001 (Wet inkomstenbelasting 2001) will be limited for 2026. This means that the tax brackets and tax credits in the Dutch income tax system will only be partially adjusted, i.e. for 52.8% of the inflation correction rate, to compensate for higher inflation. As a result, the relative tax burden will increase. 

The Tax Plan proposes changes to the rates of the first and second income tax bracket of box 1 (income from work and home ownership). The first income tax bracket, applicable to taxable income up to EUR 38,883 per year, will be adjusted to 35.70%. The second bracket, ranging from EUR 38,883 to EUR 79,137 per year, will be adjusted to 37.56%. The top rate of 49.50% will remain unchanged.

The deemed return for other assets in box 3 (income from savings and investments) will be increased to 7.78% and the statutory threshold (heffingvrij vermogen) of tax-exempt assets will decrease to EUR 51,396. 

7.2 Increased tax on lucrative interest incentives  

Since 2009. the lucrative interest regime (lucratiefbelangregeling) covers shares, receivables, and other equity interests that are granted on such terms that there is (or may be) a benefit that is considered ‘excessive’ compared to the amount of capital invested and/or the otherwise actual risk borne by the holder of the asset. The aim of the regime was to end the ongoing debate on the classification of these “lucrative interest” benefits for individual income tax purposes. In the past, taxpayers typically held that such benefits, derived from specific shares or profit rights with a speculative character, belong in box 3, while the Dutch tax authorities generally took the position that these constituted employment income or income from other activities taxable in box 1. Since 2009, a lucrative interest is characterized as income from labor and therefore taxable in box 1 at a maximum rate of 49.5%. However, the lucrative interest regime also allows for an alternative approach that allows income and gains from a lucrative interest to be taxed at the lower rate of the regime for substantial interests (box 2), if indirectly held through a qualifying holding structure. 

This year’s Tax Plan includes a proposal to increase the effective tax burden in box 2 for lucrative interests resulting in an effective tax burden up to 36%. This rate is similar to the box 3 rate.  Where, in the current situation, the regime seems workable in practice, we expect that by increasing this rate, taxpayers will be incentivized to avoid that their specific investment scheme qualifies as a lucrative interest. Such would result in extensive discussions with the DTA, including in relation to the price paid by them for their investment. 

The Tax Plan also clarifies that the difference between the fair market value and the initial cost price of the “lucrative interest” remains subject to personal income tax in box 1 once the equity held in the company through which the taxpayer holds the relevant asset starts to qualify as a substantial interest of the taxpayer for purposes of box 2. This proposal is introduced to combat scenarios where a taxpayer transfers his or her lucrative interest from box 1 to box 2 to argue that the fair market value of the ‘lucrative interest’ qualifies as the cost price for box 2 purposes. The legislator demonstrates that this had been done in practice, in anticipation of an exit, to be able to claim a tax loss which could be used in box 2 to shelter other box 2 income. 

8. Disclaimer

On October 29, 2025, new elections will be held in the Netherlands. Based on the outcome of the elections, a new Second Chamber of Parliament will be installed mid-November 2025. The written deliberation of the Tax Plan will take place before these elections, but the plenary debate and subsequent votings are to take place only after the newly elected Second Chamber of Parliament has been formally inaugurated.  It is therefore possible that the Tax Plan as it is currently drafted will be amended in the course of these parliamentary discussions. Also, new elements may be added to the Tax Plan. Notwithstanding possible adjustments to the Tax Plan, it is expected that the First Chamber of Parliament (Eerste Kamer), which has no right of amendment and can only adopt or reject a draft bill, will vote on December 16, 2025.