How the Netherlands can better support its start-ups and scale-ups

The Wennink report spotlights a real bottleneck for accelerating growth. Promising Dutch start‑ups and scale‑ups are often shut out of public support. In this first article from our series on the Wennink report, we unpack why EU‑level changes are required and what can be done nationally. 

The challenge

The Netherlands is home to more than 8,500 start‑ups and scale‑ups. For these companies, it is often a rational and necessary part of reaching commercial viability to operate at a loss during their build‑out phase. Those losses, however, can trigger the “undertaking in difficulty” (UID) label under EU State aid rules, which then bars Member States from providing public support to those companies.

While the UID label is often rightly applied to companies that are under distress, it can also catch many young, fast‑growing companies, because it relies on static balance sheet indicators. It is estimated that the current UID definition excludes 40–80% of relevant start-ups and scale-ups from receiving State aid in the Netherlands.

The changes needed at EU level

The European Commission has acknowledged this issue and is committed to reviewing the UID definition as part of the update to the Rescue and Restructuring Guidelines and the General Block Exemption Regulation (GBER). The consultation stages for these updates have now closed, with adoption currently expected in Q4 2026.

The Netherlands has urged the European Commission to prioritize the issue and has suggested several changes. Most notably, it has proposed extending the GBER safe harbor that shields young companies from the UID test from three to ten years. A ten‑year window would already be a significant and workable improvement for many innovative firms. A second suggestion is to classify hybrid instruments, such as subordinated or convertible loans, as equity under the UID test. Thirdly, the Netherlands has proposed several exclusions from, and exemptions to, the UID test. For example, it has suggested examining whether the UID test can be put aside for investment aid involving limited amounts where the beneficiary itself must bear a significant part of the investment.

What the Netherlands can do now

The EU State aid regime aims to regulate aid granted by Member States to safeguard the European level playing field. Not surprisingly, the Netherlands cannot unilaterally amend parts of the State aid legal framework, including the UID definition, and must await broader EU reform. 

As such, an ‘immediate’ departure from the strict balance sheet indicators of the UID test, as suggested in the Wennink report, is not feasible. In practice, we also see limited scope for the suggestion to make fuller use of any interpretative leeway available to Member States, as such leeway is minimal and has been further restricted by national legal precedents.

That said, the Netherlands can continue to apply the current State aid framework to catalyze investment and innovation. Two routes stand out.

• Route 1: The GBER already offers some leeway for start-ups. Under Article 2(18), companies that have been in existence for less than three years are not treated as an “undertaking in difficulty,” making public support possible without a notification. Moreover, Article 22 provides a dedicated start-up aid regime for undertakings that are less than five years old, permitting support for schemes in the form of loans, guarantees, grants, and specified tax advantages. Eligibility for aid under such schemes is not subject to the UID test.

• Route 2: Public investments made on the same terms as private investors (bearing the same risks and seeking the same returns) fall outside the State aid rules under the market economy operator (MEO) principle. This can be difficult, because the evidential burden is high. Public bodies must demonstrate that a private, profit‑seeking market operator in a comparable situation would have made the same investment. 

The way forward

There is limited room to manoeuvre for the Netherlands to resolve the critical issue identified by Wennink, as meaningful relief for start‑ups and scale-ups will require a Brussels‑led adjustment of the EU State aid regime. While this means that we cannot expect any quick changes providing solutions in the short-term, there is at least the wider recognition—and national and international political momentum—to ensure start-ups and scale-ups can be better supported from 2027 onwards.