Dutch Tax Plan 2027

On September 15, 2026, Dutch Budget Day (Prinsjesdag), the Dutch government released its tax plan for 2027 and some other tax related legislative proposals. In this publication, we will highlight the most important topics and take the opportunity to discuss some other notable Dutch tax developments for 2027 and beyond.

1. Introduction

On Tuesday September 15, 2026, Dutch Budget Day (Prinsjesdag), the Dutch government published its tax plans for 2027. The tax plans for 2027 consist of four separate legislative proposals: the Tax Plan 2027 (Belastingplan 2027) and three related legislative proposals (together the Budget Day Proposal 2027). The Budget Day Proposal 2027 includes various tax proposals relevant for the (international) business community. It includes, among others, changes to the participation exemption regime (deelnemingsvrijstelling) for hedging instruments, the implementation of the Pillar 2 Side-by-Side Safe Harbour package, an expansion of the innovation box and the implementation of a startup and scale-up stock regime.

In this publication, we discuss the legislative proposals that are most relevant to the (international) business community. Most provisions of the Budget Day Proposal 2027 are envisaged to enter into force on January 1, 2027; if later, we specifically mention this. The Budget Day Proposal 2027 is a legislative proposal and therefore subject to amendments and changes. 

In addition, we also briefly discuss some other tax developments that could impact the (international) business community. These were published or announced earlier this year. 

The Tax Plan 2027 is published here.

2. Corporate income tax

2.1 The participation exemption no longer applies to priced-in components of hedging instruments for participations in foreign currencies

Pursuant to the Dutch participation exemption, income (including dividends and capital gains) derived from a qualifying shareholding (generally at least 5% and subject to various other conditions) are not subject to Dutch corporate income tax. Foreign exchange rate movements in respect of qualifying shareholdings are also in scope of the participation exemption, meaning that if a Dutch parent holds shares in a foreign subsidiary and the tax value of that investment changes due to exchange rate fluctuations, those currency gains and losses in principle fall under the scope of the Dutch participation exemption.

If a Dutch parent entity holds a participation denominated in a currency other than its functional currency, it may wish to hedge the associated exchange rate risk, for example by taking out a loan in the same foreign currency as the subsidiary or by entering into derivative contracts. Under the current rules, foreign exchange results on such instruments are not automatically in scope of the Dutch participation exemption. Instead, the Dutch parent may file an optional request withthe Dutch Tax Authorities to confirm that the instrument serves to hedge currency risk on the participation (pursuant to article 13 paragraph 7 of the Dutch Corporate Income Tax Act (Wet op de vennootschapsbelasting 1969) (CITA). Once approved, both gains and losses on the hedging instrument are effectively not subject to corporate income tax under the participation exemption.

The Tax Plan 2027 proposes to restrict this treatment by splitting the foreign exchange result on a hedging instrument into two components:

1. The priced-in (ingeprijsd) component: this is the portion of the currency result which reflects the interest rate differential between the euro and the foreign currency at inception of the instrument and is therefore predictable at the outset. For instance, a loan denominated in a currency that the market expects to weaken will carry a higher interest rate than a comparable euro loan because the lender demands compensation for the expected currency depreciation. If that depreciation materialises, the borrower realises a corresponding foreign exchange gain on the principal of the loan. This gain was predictable from the outset and is the "priced-in" element.

2. The unpriced (niet-ingeprijsde) component: this is the portion of the currency result driven by unexpected exchange rate movements arising from unforeseen economic or political developments that cause actual rates to diverge from what the market anticipated when the hedge was initiated.

The Tax Plan 2027 proposes to exclude the priced-in component from the optional expanded scope of the Dutch participation exemption (deelnemingsvrijstelling). The election will therefore only allow the non-priced-in component to remain exempt; if no election is made, the full foreign exchange result (gain or loss, as the case may be) is included in the tax profit.

The measure will apply to financial years starting on or after January 1, 2027. However, in order to secure the proportionality of the measure, transitional rules are included in the CITA pursuant to which (i) where a ruling has been issued before the first tax year starting on or after January 1, 2027, the rules of article 13 paragraph 7 CITA as in force on December 31, 2026 continue to apply to benefits from the hedging instruments that are attributable to the period preceding that first taxyear, and (ii) for hedging instruments that were entered into before September 15, 2026 and for which a ruling was issued (or a complete application was received) before that same date, the old rules continue to apply for benefits attributable to the period through December 31, 2027.   

2.2 Opting out of the Dutch participation exemption on foreign exchange results on hedging instruments after an earlier opt-in 

The Tax Plan 2027 proposes to introduce a formal opt-out mechanism for the participation exemption on foreign exchange results on hedging instruments. Under the amended Article 13 paragraph 7 CITA, a taxpayer who has previously elected to apply the Dutch participation exemption to the foreign exchange results on a hedging instrument would be permitted to file a letter with the Dutch tax authorities to exclude the unpriced foreign exchange results from the scope of the Dutch participation exemption. The opt-out would take effect from the moment the complete request is received by the Dutch tax authorities or, if later, from the date specified in the request.

2.3 The statutory presumption of abuse in demergers and business mergers is no longer included in the Dutch Corporate Income Tax Act

Article 14a CITA provides a tax-neutral rollover facility for legal demergers (juridische afsplitsingen). The facility allows a demerger to take place without an immediate levy of Dutch corporate income tax, provided that the transaction meets certain requirements and is not primarily aimed at the avoidance or deferral of taxation. Under the current rules, a demerger is deemed to be primarily aimed at the avoidance or deferral of taxation if the shares in either the demerging or acquiring entity are transferred to a third party within three years following the demerger (the Avoidance Presumption). The Avoidance Presumption shifts the burden of proof to the taxpayer, who must demonstrate that the demerger was actually based on valid business reasons. 

On February 27, 2026, the Dutch Supreme Court (Hoge Raad) ruled that the Avoidance Presumption is incompatible with the EU Merger Directive (Council Directive 2009/133/EC). It follows from EU case law that no general presumption of tax fraud or tax avoidance may be applied. Such general presumption is present in case the Tax Authorities are not required to furnish even a prima facie indication that valid commercial reasons are absent or that there are indications of tax fraud or tax avoidance and that it is up to the taxpayer to demonstrate that the transaction in question is motivated by valid commercial reasons and does not have as its principal objective or one of its principal objectives tax fraud or tax avoidance. As a result, each specific transaction must be examined in its entirety on a case-by-case basis and the tax authorities have the burden of proof to substantiate the position that the demerger is primarily aimed at the avoidance or deferral of tax with concrete and transaction specific evidence. In response to this court ruling, the Dutch legislator has now proposed in the Other Tax Measures 2027 (Overige fiscale maatregelen 2027) that the Avoidance Presumption will be abolished from article 14a CITA. 

The Avoidance Presumption is no longer in effect since the date of the ruling of the Dutch Supreme Court, meaning that this measure is only the codification of this new reality.

Furthermore, since a similar avoidance presumption applied in relation to business mergers (bedrijfsfusies), laid down in article 14 paragraph 4 CITA, also that avoidance presumption is proposed to be abolished. 

2.3 Relaxation of earningsstripping rule for housing associations

The earningsstripping rule is a generic interest deduction limitation rule included in the Dutch CITA implementing provision of the EU Anti-Tax Avoidance Directive 1 (ATAD 1). Based on the earningsstripping rule, net interest expenses (i.e. interest expenses minus interest income) may only be deducted up to 24.5% of a taxpayer’s (adjusted) taxable profit or, if higher, EUR 1 million. Non-deductible net interest expenses can be carried forward indefinitely to subsequent years.

The earningsstripping rule has a particular adverse impact on housing associations (woningcorporaties), which generally incur annual interest expenses exceeding this 24.5% threshold as a result of higher debt levels due to secured (mortgage) lending. The cover letter accompanying the Tax Plan 2027 indicates that an amendment (nota van wijziging) to the Tax Plan 2027 will introduce a carve-out from the earningsstripping rule for housing associations. This exemption intends mitigating the adverse effects of the earningsstripping rule on housing corporations and to expand their (tax deductible) funding capacity for investment. 

2.4 Expansion of the simplified innovation box

The innovation box (innovatiebox) is an optional regime as a result of which income from innovative activities is effectively subject to a reduced corporate income tax rate.  To reduce the administrative burden for smaller companies, the innovation box also includes a simplified method in Article 12bd CITA under which 25% of a taxpayer’s profit is taxable under the innovation box, subject to a maximum amount. That maximum has been EUR 25,000 since the scheme was introduced in 2013.

The Tax Plan 2027 proposes to increase this maximum to apply the simplified method from EUR 25,000 to EUR 100,000. According to the government, an evaluation found that the simplified method is underused because the current maximum is considered too low for the benefits to outweigh the costs of applying the innovation box. The government expects approximately 750 additional taxpayers, predominantly small and medium-sized enterprises (SMEs), to start using the simplified method or the innovation box more generally by increasing this maximum to EUR 100,000. Although the simplified method is primarily aimed at SMEs, the increased maximum may also benefit smaller Dutch subsidiaries within international groups that have not previously applied the innovation box because of the administrative burden.

2.5 Our view

The Dutch corporate income tax related proposals are limited. We believe that the quite technical amendment to the Dutch participation exemption is fair as the priced-in component has an insufficient direct relationship with the participation in the subsidiary. The abolishing of the Avoidance Presumption is a direct consequence of the recent Supreme Court case law. In practice, taxpayers will still need to anticipate discussions on avoidance properly. Housing associations shall very much welcome the announced change to the earningsstripping rule as these have been addressing the significant impact of these rules on multiple occassions in the past. However, this may only enter into force as per 2028, which may be considered as too late by the associations. The increase of the maximum profit eligible for the simplified innovation box regime may make the regime more accessible to SMEs and is a welcome measure to support innovation. 

3. Dividend withholding tax 

3.1 Dividend withholding tax refund scheme for Dutch investors in foreign investment funds

In principle, Dutch tax resident individual shareholders and certain Dutch tax resident entities can credit or reclaim Dutch dividend withholding tax (DWT) against their Dutch income or corporate income tax liability, as a result of which the DWT functions as a prelevy rather than a final charge. A specific mechanism exists for Dutch fiscal investment institutions (fiscale beleggingsinstellingen, or FBIs), which are subject to a 0% corporate tax rate and distribute virtually all of their income to participants within a certain time frame. Because FBIs themselves cannot credit DWT against their Dutch corporate income tax liability, their Dutch underlying investors are, in effect, compensated for (a part of) the foreign withholding taxes levied on distributions to the FBI by allowing a discount on the Dutch dividend withholding tax to be paid to the Dutch tax authorities by the FBI without reducing the amount of tax deemed to be withheld.

A disparity arises, however, when Dutch tax resident investors hold their investments indirectly through foreign investment institutions that are comparable to Dutch FBIs but do not qualify for the FBI regime. Dividend withholding tax withheld on distributions from Dutch companies to such foreign funds constitutes a final levy, as neither the foreign fund nor its Dutch investors have the possibility to obtain a credit or refund. This places Dutch investors who invest through foreign funds at a disadvantage compared to those who invest through domestic FBIs, an outcome that raises concerns under EU free movement of capital principles.

In its judgment of September 13, 2024, the Dutch Supreme Court (Hoge Raad) addressed this situation. In response to this ruling, the Other Tax Measures 2027 proposes a refund scheme for Dutch investors receiving dividends originating from Dutch tax resident companies through foreign investment institutions (Article 10b Dutch Dividend Withholding Tax Act (DWTA)). Under this scheme, eligible Dutch investors will be entitled, subject to certain conditions, to reclaim the Dutch dividend withholding tax withheld on distributions to the foreign investment institution. The objective is to eliminate the tax disadvantage identified by the Supreme Court and to ensure equal treatment regardless of whether an investor participates in a domestic or foreign fund.

3.2 Adjustment to the group concept for a Qualifying Membership Right in a Holding Cooperative

Unlike a company (BV or NV), a cooperative has members rather than shareholders, and those members hold membership rights rather than shares. The Netherlands levies DWT on distributions made by a cooperative, but only if the cooperative qualifies as a so-called ‘holding cooperative’ (houdstercoöperatie) and the membership rights held by its members are ‘qualifying membership rights’ (kwalificerende lidmaatschapsrechten).

A membership right is a qualifying membership right if it entitles the holder to at least 5% of the cooperative's annual profits or at least 5% of the liquidation proceeds. To prevent taxpayers from artificially staying below this 5% threshold by fragmenting their interests, the law requires that the membership rights of related parties are aggregated. 

More specifically, the interests of entities and individuals connected to a member, including members of a so-called "cooperating group" (samenwerkende groep) are aggregated when testing whether the 5% threshold is met. The concept of a cooperating group originates from CITA. Under this concept, an entity is considered related to another entity if that entity has an interest in the taxpayer and, together with one or more other entities holding an interest in that taxpayer, forms a cooperating group holding at least a one-third interest in the taxpayer. The current definition of a qualifying membership right in the DWTA could be interpreted as requiring the cooperating group test to be applied at the level of  an individual member, rather than to the members’ interest in the holding cooperative.

The Tax Omnibus Act 2027 proposal (Fiscale Verzamelwet 2027), which dates from April 2026, clarifies that membership rights held by members who together form a cooperating group are aggregated when testing the 5% threshold. The government has stated that this is intended as a clarification of the original legislative intent and therefore not as a substantive change to the law. The Tax Omnibus Act 2027 was submitted to the House of Representatives (Tweede Kamer) on April 23, 2026 and is expected to enter into force on January 1, 2027.

3.3 Our view

The possibility to obtain a refund of Dutch dividend withholding tax in stapled structures provides for a more level playing fields for the investment fund industry. The adjustment to the cooperating group concept as regards qualifying membership rights is a mere clarification.

4. Dutch Minimum Tax Act 2024 (Pillar 2)

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 tax years immediately preceding the tested tax year. The Pillar 2 directive is based on the OECD Pillar 2 GloBE Rules and is therefore largely consistent with these rules. 

On January 5, 2026, the members of the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting reached an agreement on the so-called Side-by-Side Package. This package modifies the Pillar 2 rules by introducing several mechanisms to allow the standard Pillar 2 top-up tax rules to be partially or fully set aside. These mechanisms include: (i) a "Side-by-Side" Safe Harbour for MNE groups headed in jurisdictions with qualifying minimum tax systems, (ii) a Substance-Based Tax Incentive (SBTI) Safe Harbour, (iii) a permanent Simplified Effective Tax Rate (ETR) Safe Harbour, and (iv) an extension of the existing Transitional Country-by-Country Reporting (CbCR) Safe Harbour.

The Netherlands published draft legislation implementing these measures for internet consultation from 16 June until July 14, 2026. These measures are now included in the Tax Plan 2027 (Belastingplan 2027) as amendments to the Dutch Minimum Tax Act 2024 (Wet minimumbelasting 2024).

4.1 Side-by-Side Safe Harbour

The core innovation of the Side-by-Side Package is a mechanism to accommodate jurisdictions (in particular the United States of America) that already maintain their own robust minimum tax systems. The Side-by-Side Package introduces a mechanism under which jurisdictions that maintain a Qualifying Equivalent Minimum Tax System may, in effect, displace the application of the Pillar 2 rules. 

For a jurisdiction to qualify, its tax system must meet the following cumulative requirements.

• Eligible domestic tax system: the jurisdiction must (a) levy a corporate income tax at a statutory nominal rate of at least 20% (after taking into account preferential adjustments and sub-national corporate income taxes), (b) maintain a qualifying domestic minimum top-up tax (QDMTT) or a corporate alternative minimum tax based on financial statement income applied at a nominal rate of at least 15%, and (c) present no material risk that in-scope MNE groups headquartered there will be subject to an effective tax rate below 15% on the overall profits of their domestic operations.

• Eligible worldwide tax system: the jurisdiction must have an eligible worldwide tax system, meaning it operates a worldwide or residence-based corporate income tax system that provides a foreign tax credit for QDMTTs, subject to domestic law limitations. 

Both the eligible domestic and eligible worldwide tax systems must have been enacted and in effect prior to January 1, 2026.

Qualifying jurisdictions are listed on the OECD Central Record of Legislation with Qualified Status. The United States of America currently is the only jurisdiction that is formally recognised as having a Qualifying Equivalent Minimum Tax System. 

Under the Side-by-Side Package, even where the safe harbour is elected, MNE groups will remain subject to QDMTTs in the jurisdictions where they operate and have the obligation to file GloBE Information Returns. As a result, the implementation of the Side-by-Side Package means that, once enacted, Dutch group entities within US-headed MNE groups will no longer be required to apply the IIR or the UTPR in respect of low-taxed foreign subsidiaries of those groups, and the Dutch constituent entities will no longer be subject to the UTPR in respect of such group's profits. 

Additionally, the Side-by-Side Package introduces a UPE Safe Harbour (uiteindelijkemoederentiteit-veiligehavenregel), which is narrower in scope than the Qualifying Equivalent Minimum Tax Safe Harbour and may only apply to jurisdiction to which the Side—by-Side Package does not apply. 

The UPE Safe Harbour only shields the UPE jurisdiction from the UTPR, meaning the top-up tax under the UTPR is deemed nil with respect to constituent entities located in the UPE's own jurisdiction, but the IIR and UTPR continue to apply in respect of operations elsewhere. In order to qualify, a jurisdiction only needs to meet the eligible domestic tax system criteria described above but not the eligible worldwide tax system requirement. The domestic tax system must have been enacted and in effect as of January 1, 2026. As of the date of writing, no jurisdiction has been listed as having a Qualified UPE Regime. 

4.2 Substance-Based Tax Incentive (SBTI) Safe Harbour 

Many jurisdictions use tax incentives to encourage investment, innovation and sustainable development. Under the original Pillar 2 rules, such incentives could effectively be clawed back through a top-up tax if they reduced a group's effective tax rate below 15% in a jurisdiction. The SBTI Safe Harbour (kwalificerende fiscale stimuleringsregeling-veiligehavenregel) addresses this issue by allowing MNE groups to add the tax benefit amount  of certain Qualified Tax Incentives (QTIs) to its Covered Taxes, up to the applicable Substance Cap. This increases the effective tax rate for Pillar 2 purposes, and for the portion covered by the safe harbour, effectively prevents top-up tax on profits benefiting from the QTIs.  

A QTI is defined as a generally available tax incentive that is calculated based on qualifying expenditures incurred, where the benefit amount does not exceed those expenditues, or is determined by reference to  the volume of tangible production in a jurisdiction.  Tax incentives calculated by reference to income (fiscale regelingen berekend aan de hand van het inkomen) do not qualify as QTI.

The amount that may be added to Covered Taxes (the numerator of the ETR calculation) is the lower of:

• the QTI benefit used in the tax year; and

• a Substance Cap, which is the higher of:

• 5.5% of eligible payroll costs or depreciation of eligible tangible assets in the jurisdiction; or

• under an alternative five-year election, 1% of the carrying value of eligible tangible assets (excluding land and other non-depreciable assets).

In addition, an MNE group may elect annually to treat a Qualified Refundable Tax Credit or a Marketable Transferable Tax Credit as a QTI. Where such an election is made, the normal treatment of those credits under the covered taxes calculation is disapplied, and the benefit is instead captured through the STBI mechanism. 

For Dutch taxpayers, the SBTI Safe Harbour rules may be particularly relevant for expenditure-based incentives such as the energy investment allowance (Energie-investeringsaftrek, EIA), the Environmental Investment Allowance (milieu-investeringsaftrek, MIA) and the Small-scale investment tax deduction (kleinschaligheidsinvesteringsaftrek, KIA), which, according to the Dutch Secretary of State, meet the QTI definition in article 1.2 Dutch Minimum Tax Act. The innovation box (innovatiebox), does not qualify as a QTI because its benefit is calculated by reference to income and there is no direct one-to-one link between the expenditure and the tax advantage. 

The SBTI Safe Harbour is an annual election made on a jurisdictional basis and is available for tax years beginning on or after January 1, 2026. The measure will be implemented through article 8.17 of the Dutch Minimum Tax Act. 

4.3 Simplified ETR Safe Harbour

The Side-by-Side package introduces a permanent Simplified ETR Safe Harbour (vereenvoudigde effectieve belastingtarief-veiligehavenregel) intended to eventually replace the Transitional CbCR Safe Harbour. Where the Simplified ETR for a Tested Jurisdiction is at least 15% (or the jurisdiction shows a simplified loss), the top-up tax is deemed nil. The Simplified ETR is based on financial accounting data with specific integrity adjustments and offers several elective simplifications, making the compliance burden significantly lighter than a full GloBE calculation.

Importantly, the Simplified ETR Safe Harbour is subject to entry conditions designed to prevent selective use: it can only be first applied for a Tested Jurisdiction if no top-up tax was due for that jurisdiction in any tax year commencing within 24 months prior to the first day of that tax year. A comparable re-entry rule applies where the safe harbour was previously applied but subsequently discontinued.

Under the OECD Side-by-Side Package, the Simplified ETR Safe Harbour is generally available for tax years beginning on or after December 31, 2026 (i.e., FY 2027 for calendar-year groups), with the possibility for jurisdictions to opt for earlier adoption from tax years beginning on or after December 31, 2025. Early adoption for tax years beginning between December 31, 2025 and December 31, 2026 is, however, subject to one of the following three conditions being met for each tested jurisdiction: (a) a QDMTT safe harbour applies for that jurisdiction, (b) no more than one jurisdiciton is entitled to collect top-up tax for that jurisdiction, (c) all jurisdictions entitled to top-up tax have implemented the Simplified ETR Safe Harbour for tax years beginning on orf after December 31, 2025 and the MNE group elects to apply it in all those jurisdictions. The Permanent Simplified ETR Safe Harbour will be implemented in article 8.11 Dutch Minimum Tax Act with retroactive effect to December 31, 2025, meaning that calendar-year groups can already apply the Simplified ETR Safe Harbour for FY 2026 in the Netherlands.

4.4 Transitional CbCR Safe Harbour

The Transitional CbCR Safe Harbour allows MNE groups to rely on data from existing Country-by-Country Reports to determine whether a jurisdiction is exempt from top-up tax. This safe harbour is extended by one year, now applying to tax years beginning on or before December 31, 2027 (provided they do not end after June 30, 2029). The transitional ETR rate of 17% is also extended to 2027. 

The 'once out, always out' rule remains in force: groups that did not elect the safe harbour for a jurisdiction in an earlier year cannot do so in subsequent years. 

The extension will be implemented in article 8.8 of the Dutch Minimum Tax Act. A targeted amendment to article 8.14 Dutch Minimum Tax Act also addresses an unintended gap for groups with 52/53-week tax years in the transition from the Transitional CbCR Safe Harbour to the new Simplified ETR or UPE Safe Harbour.

4.5 Our view

The Pillar 2 rules are complex and the proposed changes do not reduce the level of technical complexity. At the same time, most amendments provide for welcome relaxation as regards the impact of the rules and the compliance burden.

5. Employment 

5.1 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 the 'Expat Facility'. Under the Expat Facility, a tax-free allowance of currently 30% of an employee’s Dutch-sourced remuneration (including the tax-free allowance) can be granted to qualifying incoming expatriates employed by a Dutch employer. As was part of the tax plan 2025, the percentage will be lowered to 27% as of January 1, 2027. 

5.2 Startups and Scaleups 

The Dutch government aims to improve the business climate for innovative enterprises in the Netherlands. To that end, an internet consultation on the proposed Tax Incentives for Startups and Scale-ups Act (Wet fiscale stimulering startups en scale-ups) took place in April 2026. The act contains two measures, being a new definition of startups and scale-ups for payroll tax purposes and a scheme to make employee participation through stock options more attractive. Under the proposed stock option scheme, the taxable base for stock option income in relation to qualifying startups and scale-ups will be narrowed to 65% of the taxable base under the current regime, resulting in lower payroll taxes for employees of qualifying startups and scale-ups. As a result, the maximum effective tax rate on income from qualifying stock options will effectively decrease from the current 49.5% to approximately 32%. The 65% base reduction applies to income from the sale of shares obtained through exercise of options, as well as to income taxed under the election for accelerated taxation (at exercise or tradability); it does not apply to the extent the exercise price was below the fair market value of the underlying shares at the time of the grant. In addition, the proposed act introduces an election mechanism that allows employees to defer taxation until the actual sale of the underlying shares or termination of their employment. The startup or scale-up remains the withholding agent (inhoudingsplichtige) after the employment was terminated and must withhold and remit payroll tax at the time of sale by the employee. To facilitate this, any sale of shares by a (former) employee requires prior written approval from the withholding agent, documented in an agreement between the seller, the buyer and the withholding agent. The withholding agent may recover the payroll tax due from the (former) employee. 

Stock options or shares in a startup or scale-up that qualify as a lucrative interest (lucratief belang) within the meaning of the Dutch Income Tax Act 2001 (Wet inkomstenbelasting 2001) are excluded from the proposed stock option scheme. The proposed scheme includes provisions to preserve Dutch taxing rights over stock option income which has not yet been realized upon emigration.

An enterprise qualifies as a startup or scale-up if it employs a scalable and repeatable business model derived from innovation, whose shares are not traded on a regulated market, and of which not more than 25% of its shares are held by an entity whose shares are traded on a regulated market. The Dutch Enterprise Agency (RVO) assesses, upon request, whether a specific company meets these criteria. 

In this respect, scalability and repeatability mean the ability of an enterprise to grow its revenue rapidly without a proportional increase in headcount, resources, or costs, by leveraging technology that delivers lower marginal costs and economies of scale. Innovation means the development or improvement of products, services, processes, or technologies involving technical novelty or a significant functional improvement relative to the market. 

The new stock option scheme for startup and scale-ups is envisaged to apply to stock options granted on or after April 17, 2025 and that have not yet been exercised on December 31, 2026. 

To cover the budgetary effects of the new stock option scheme, the legislator proposes a 75% reduction of the co-working spouse deduction (meewerkaftrek) and the cessation deduction (stakingsaftrek) for start-ups and scale-ups from the date the stock option measure enters into force (intended January 1, 2027), and a full abolition taking effect at the beginning of the third calendar year after the year in which the reduction entered into force. 5.3 Abolishment of the WCR exemption on industry-specific products and services

The Tax Plan 2027 proposes abolishing the targeted exemption (gerichte vrijstelling) for sector-specific products and services under the Work-Related Costs Scheme (werkkostenregeling, or WCR). Currently, employers in certain industries can provide their employees with tax-free discounts on sector-specific products or services subject to specific conditions and caps. For example, airline staff receiving discounts on flights or retail employees receiving product discounts.

Under the proposed measure, employers will still be permitted to offer staff discounts, but these will no longer qualify for a separate targeted exemption. Instead, the value of the discount must be charged against the employer's general discretionary budget within the WCR. A practical simplification that accompanies this change is that employers will no longer be required to track and record the amount of discount granted to each individual employee.

This change is particularly relevant where staff discount programmes form part of employee benefits packages. Organisations will need to assess whether their existing discretionary budget under the WCR can absorb the additional cost or whether they risk exceeding the threshold, which triggers an 80% final levy on the excess, payable by the employer. 

5.3 Pseudo Final Levy on private use of fossil fuel company cars

The Other Tax Measures 2027 proposes to introduce a new pseudo-final levy for the private use of fossil fuel company cars. The measure, which originates from the Other Tax Measures 2027, aims to accelerate the shift of company car fleets towards sustainable vehicles.

For this purpose, a fossil fuel car means a car that is not entirely emission-free (i.e. a hybrid car is a fossil fuel car for this purpose), and the definition of use for private purposes also includes the commute between home and work. The proposed rate is 12% of the catalogue 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.  For cars already made available before January 1, 2027, the transitional period is extended to December 31, 2030. During that transitional period, a fossil fuel car made available on a one-time basis for no more than seven consecutive days in a calendar year is exempt. The levy also does not apply to a replacement car made available during maintenance or repair for up to 14 calendar days per maintenance or repair period.

5.4 Our view

The amendments to employment related taxation are in part reasoned by budgetary arguments. It is good that the expat facility largely remains in place. The abolishment of the WCR-exemption on industry-specific products and services is understandable on the one hand. On the other hand, offering such products and services creates a bond between the employer and the employee which may have certain intangible benefits and abolishing the associated tax benefits may have a bigger impact that just a monetary one in case it results in less such products and services being offered. 

6. Individual income tax

6.1 Individual Income Tax Rates and Freedom Tax

Every year, the government applies a statutory inflation adjustment to ensure that the tax system reflects changes in the cost of living. To fund the significant increase in defence spending, however, a so-called "freedom contribution" (vrijheidsbijdrage) has been proposed in the Tax Plan 2027, which was first introduced in the coalition agreement (coalitieakkoord) of the current Dutch government. The freedom contribution consists of a limitation on the application of the table correction factor (tabelcorrectiefactor) in the Dutch Income Tax Act (Wet inkomstenbelasting 2001) for the years 2027 and 2028. By not fully adjusting the tax brackets in the Dutch income tax for inflation, the effective tax burden will increase on individuals. 

The Tax Plan 2027 proposes the following changes to the rates and tax brackets of box 1. The first income tax bracket, applicable to taxable income up to EUR 39,247 per year, will be adjusted to 8.58%. The second bracket, ranging from EUR 39,247 to EUR 78,426 per year, will be adjusted to 38.16%. The top rate of 49,50% remains unchanged. The freedom contribution is implemented by not fully applying the statutory inflation adjustment (the table correction factor) to the relevant amounts in 2027 and 2028. As a result, the tax brackets and related amounts are adjusted to a lower amount than they otherwise would be, increasing the effective tax burden on individuals. 

The Tax Plan 2027 also proposes to increase the Energy Investment Allowance (energie-investeringsaftrek) from 40% to 45,5% as of January 1, 2027.

6.2 Tax basis substantial interest upon corporate seat transfer to the Netherlands

Under the Dutch individual income tax system, ‘box 2’ applies to individuals who hold a substantial interest (aanmerkelijk belang) in a company. A substantial interest generally exists where an individual, alone or together with their partner, directly or indirectly holds at least 5% of the nominal issued share capital in a company or 5% of a class of shares in that company. Box 2 taxes dividends received from, and capital gains realised on the disposal of, such shareholdings. 

When a company migrates its place of effective management (feitelijke leiding) to the Netherlands, the company becomes a Dutch tax resident. As from that moment, foreign holders of a substantial interest in that company become subject to Dutch tax on income derived from their shareholding. This raises a practical question at what value the shares should be recorded for Dutch tax purposes.

To address this, the Tax Plan 2027 proposes that the cost basis (verkrijgingsprijs) of the shares for box 2 purposes is set at the fair market value of the shares at the time the company becomes Dutch tax resident, ensuring that only gains accruing after the moment of migration fall within the scope of Dutch taxation.  

This is commonly referred to as a ‘step-up’: it ensures that any increase (or decrease) in the value of the shares that occurred before the company migrated to the Netherlands is not subject to Dutch taxation. Only gains or losses accruing after the moment of migration fall within the scope of the Dutch box 2 charge. This approach is consistent with the current Dutch territorial principle it applies to substantial interest holders: the Netherlands only taxes value changes that arise during the period in which a Dutch tax liability exists. Without this step-up, a shareholder could be taxed on gains that accumulated entirely in a period when neither the shareholder nor the company had any connection to the Dutch tax system. 

6.3 Box 3

Box 3 is the component of the Dutch individual income tax system that taxes income from savings and investments. Historically, the Netherlands taxed a deemed return (forfaitair rendement) to taxpayers' net assets, meaning that income tax was levied on a fictitious yield rather than on the actual returns generated. In its landmark December 2021 ruling (Kerstarrest), the Dutch Supreme Court (Hoge Raad) ruled that this system violated the right to property and the prohibition of discrimination under the European Convention on Human Rights as, in short, the deemed return could be higher than the actual investment return achieved. 

In 2025, interim legislation was introduced in the form of the Real Return Box 3 Act (Wet werkelijk rendement box 3), which aims to tax individuals on their actual investment returns rather than deemed returns. The bill was adopted by the House of Representatives (Tweede Kamer) on February 12, 2026 and is currently under consideration by the Senate (Eerste Kamer). 

The Tax Plan 2027 does not include a proposal for a significant overhaul of box 3 taxation. Instead, the State Secretary of Finance has indicated in the cover letter to the Tax Plan 2027 that he will inform the House of Representatives (Tweede Kamer) by means of a separate letter regarding the current status of box 3. It is expected that this letter will include a proposal for several amendments to the (still to be adopted) Real Return Box 3 Act. Among the key expected amendments is the introduction of a one-year loss carry-back facility, enabling taxpayers to offset box 3 losses against the prior year's box 3 income. The letter is also expected to provide for a roll-over (deferral) regime for partners entering into or dissolving a community of property (gemeenschap van goederen), applicable to real estate and shares in start-up companies. Finally, the letter addresses the proposed envisaged further development of the system in the direction of a capital gains tax (vermogenswinstbelasting). 

The new box 3 regime including these amendments is scheduled to take effect on January 1, 2028.

6.4 Our view

The changes to the Dutch individual income tax rules are limited and mainly driven by budgetary reasons. The step-up in tax basis of substantial interest shareholdings shall only affect a limited number of people. The box 3 tax regime shall be under review during the coming years and further changes shall likely be announced next year.

7. Value added tax

7.1 Expansion of the One-Stop Shop and adjustment to the call-off stock simplification

The One-Stop Shop (OSS) is a simplified value added tax (VAT) compliance mechanism that allows businesses to report and remit VAT due in other EU Member States through a single electronic portal in their Member State of establishment, rather than having to register for VAT purposes in each Member State of consumption individually. The OSS is currently available for certain cross-border supplies of services, intra-Community distance sales of goods and certain domestic supplies facilitated by electronic interfaces.

As part of the implementation of the EU "VAT in the Digital Age" (ViDA) package, the Act implementing the VAT in the Digital Age Directive – single VAT registration (Wet implementatie Richtlijn btw in het digitale tijdperk – enkele btw-registratie) (Implementation Act), which dates from March 2026, proposes to expand the scope of the OSS in the Dutch VAT Act (Wet op de omzetbelasting 1968) to include, among others, cross-border supplies of gas, electricity, heating and cooling. This expansion allows suppliers of these commodities to declare and remit the VAT due in the Member State of consumption through the OSS portal, thereby eliminating the need for VAT registrations in each jurisdiction where customers are located.

In addition, the Implementation Act includes adjustments to the existing call-off stock simplification (voorraad op afroep), which currently allows businesses to transfer goods to another Member State for a known customer without triggering an immediate deemed supply, provided that certain conditions are met. The proposed amendments serve as a transitional measure ahead of the introduction of a new transfer regime (overbrengingsregeling), scheduled to take effect on July 1, 2028. 

7.2 Our view

The limited changes to the VAT rules are quite technical in nature and are generally beneficial for the relevant tax payers.

8. Real estate transfer tax 

8.1 Rate reduction

The Tax Plan 2027 proposes a reduction of the Dutch real estate transfer tax (overdrachtsbelasting) (RETT) rate for residential properties not used as the buyer's main residence (such as buy-to-let properties and holiday homes) from 8% to 7%. 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. A RETT rate of 4% applies to certain newly built real estate acquired in the context of a share deal in cases where VAT would be a cost in a direct transfer of the real estate. 

The rate reduction from 8% to 7% is intended to support the residential rental and investment market and will apply to acquisitions made on or after January 1, 2027. The general RETT rate for non-residential property (such as commercial buildings and land) remains at 10.4%.

8.2 New RETT exemption for housing associations

The Tax Plan 2027 also proposes a new exemption from Dutch RETT for transfers of real estate between housing associations (toegelaten instellingen) under the Housing Act (Woningwet). The proposed exemption applies exclusively to real estate used for the performance of services of general economic interest (diensten van algemeen economisch belang) as referred to in Article 47(1)(b) and (d) of the Housing Act, such as social housing and care facilities. Similar to the exemption from the earnings-stripping rule discussed in Section 2.3, this measure is aimed at increasing the investment capacity of housing associations.

8.3 Our view

Although the incentivisation of housing associations is a step in the right direction, the rate reduction alone is unlikely to provide sufficient support to the residential rental and investment market considering many other factors that impact it (including rent regulatory rules and the developments regarding Box 3). The 10.4% rate for non-residential property is still considered a significant and a relevant negative distinguishing factor when deciding to invest in the Dutch or other European real estate property. 

Disclaimer

It is possible that the Tax Plan 2027 as it is currently drafted will be amended in the course of parliamentary discussions. New elements may be added to the Budget Day Proposal 2027. It is currently expected that the House of Representatives will vote on the final contents of the Budget Day Proposal 2027 on November 12, 2026. The Senate (Eerste Kamer), which has no right of amendment and can only adopt or reject a bill, is expected to vote on the Tax Plan 2027 on December 15, 2026.