{"id":127892,"date":"2026-02-05T14:04:46","date_gmt":"2026-02-05T14:04:46","guid":{"rendered":"https:\/\/my.legal500.com\/guides\/?post_type=comparative_guide&#038;p=127892"},"modified":"2026-02-05T14:25:28","modified_gmt":"2026-02-05T14:25:28","slug":"the-netherlands-employee-incentives","status":"publish","type":"comparative_guide","link":"https:\/\/my.legal500.com\/guides\/chapter\/the-netherlands-employee-incentives\/","title":{"rendered":"The Netherlands: Employee Incentives"},"content":{"rendered":"","protected":false},"template":"","class_list":["post-127892","comparative_guide","type-comparative_guide","status-publish","hentry","guides-employee-incentives","jurisdictions-the-netherlands"],"acf":[],"appp":{"post_list":{"below_title":"<div class=\"guide-author-details\"><span class=\"guide-author\">Osborne Clarke N.V.<\/span><span class=\"guide-author-logo\"><img src=\"https:\/\/my.legal500.com\/guides\/wp-content\/uploads\/sites\/1\/2019\/07\/Osborne_Clarke.jpg\"\/><\/span><\/div>"},"post_detail":{"above_title":"<div class=\"guide-author-details\"><span class=\"guide-author\">Osborne Clarke N.V.<\/span><span class=\"guide-author-logo\"><img src=\"https:\/\/my.legal500.com\/guides\/wp-content\/uploads\/sites\/1\/2019\/07\/Osborne_Clarke.jpg\"\/><\/span><\/div>","below_title":"<span class=\"guide-intro\">This country specific Q&amp;A provides an overview of Employee Incentives laws and regulations applicable in The Netherlands<\/span><div class=\"guide-content\"><div class=\"filter\">\r\n\r\n\t\t\t\t<input type=\"text\" placeholder=\"Search questions and answers...\" class=\"filter-container__search-field\">\r\n\t\t\t<\/div>\r\n\r\n\t\t\t\r\n\r\n\r\n\t\t\t<ol class=\"custom-counter\">\r\n\r\n\t\t\t\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What kinds of incentive plan are most commonly offered and to whom?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Incentive plans are commonly used in the Netherlands to motivate and reward employees. The most common types of incentive plans include:<\/p>\n<ul>\n<li>Bonus payments: the employee receives a cash bonus, paid annually or monthly, based on (company or individual) targets, individual performance, or \u2013 most common \u2013 a combination of both (often referred to as KPIs).<\/li>\n<li>Commission payments: the employee receives a variable earning, almost always directly related to (individual) sales performance.<\/li>\n<li>Profit sharing: the employee receives a share of the company&#8217;s profit, usually paid annually.<\/li>\n<li>Long-Term Incentive Plans (LTIPs): specifically focussed to reward the employee for achieving long-term company goals, typically over a period of 3 to 5 years.<\/li>\n<li>Retention bonus payments: the employee receives a bonus during critical periods such as mergers or acquisitions or for a certain duration of continued employment.<\/li>\n<\/ul>\n<p>Although the incentive plans can be offered to every employee or other staff member, it is usually granted to executive or senior management, or key employees.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What kinds of share option plan can be offered?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>In the Netherlands, companies can offer various types of Employee Stock Option Plans (ESOPs) to their employees. The general mechanics of the ESOPs is that the employee is offered the option to buy company shares at a predetermined strike price.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What kinds of share acquisition\/share purchase plan can be offered?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The most common Employee Share Purchase Plans (ESPPs)&#8221; allow the employee to purchase:<\/p>\n<ul>\n<li>Restricted Stock Units (RSUs): the employee receives company shares (or depositary receipts), which typically vest over time.<\/li>\n<li>Performance Stock Units (PSUs): the employee receives company shares (or depositary receipts), based on the achievement of specific performance targets.<\/li>\n<\/ul>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What other forms of long-term incentives (including cash plans) can be offered?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Stock appreciation Rights (SARs), Virtual Stock or Phantom Share Plans: the employee does not receive actual shares but rather a cash bonus equivalent to the value of a certain number of shares. This plan mimics the benefits of stock ownership without issuing actual shares.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any limits on who can participate in an incentive plan and the extent to which they can participate?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>There are generally no legal restrictions in the Netherlands on who can participate in an incentive plan, but companies often set their own eligibility criteria based on factors such as position and performance. However, certain (semi)public sectors do have restrictions on remuneration.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Can awards be made subject to performance criteria, vesting schedules and forfeiture?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Yes, awards under incentive plans in the Netherlands can be made subject to performance criteria, (reverse) vesting schedules, and forfeiture provisions. These mechanisms are commonly used to align for the purpose of incentivising long-term goals of the company and to ensure that the incentives are effectively implemented.<\/p>\n<ul>\n<li>Performance criteria are specific (individual or collective) targets that must be achieved for the awards to be granted (or to vest).<\/li>\n<li>A vesting schedule is a timeline over which the employee earns the right to receive, exercise or keep the awarded shares or options.<\/li>\n<li>Forfeiture \/ leaver provisions (or &#8220;clawback&#8221;) allow the company to revoke or reclaim awards under certain conditions.<\/li>\n<\/ul>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Can awards be made subject to post-vesting and\/or post-employment holding periods. If so, how prevalent are these provisions both generally and by reference to specific sectors?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Yes, awards under incentive plans can be made subject to post-vesting and\/or post-employment holding periods (also called a &#8220;lock-up&#8221;). These provisions are common in the Dutch market.<\/p>\n<ul>\n<li>A post-vesting holding period requires employees to hold onto their vested shares or options for a specified period before they can sell or transfer them.<\/li>\n<li>A post-employment holding period requires employees to retain their shares or options for a certain period even after they have left the company.<\/li>\n<\/ul>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">How prevalent malus and clawback provisions are and both generally and by reference to specific sectors?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Clawback provisions in the form of leaver arrangements are standard practice in all employee incentive plans across all sectors.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the tax and social security consequences for participants in an incentive plan including: (i) on grant; (ii) on vesting; (iii) on exercise; (iv) on the acquisition, holding and\/or disposal of any underlying shares or securities; and (v) in connection with any loans offered to participants (either by the company operating the incentive plan, the employer of the participant (if different) or a third party) as part of the incentive plan.<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p><strong>Tax treatment upon receipt<\/strong><\/p>\n<p>For Dutch tax resident employees working on the basis of an employment agreement, the main tax consequences of the various incentive types are summarised in the table below.<\/p>\n<table>\n<tbody>\n<tr>\n<td width=\"167\"><strong>MIP type<\/strong><\/td>\n<td width=\"167\"><strong>Taxable moment<\/strong><\/td>\n<td width=\"167\"><strong>Remarks<\/strong><\/td>\n<\/tr>\n<tr>\n<td width=\"167\">Cash bonus<\/td>\n<td width=\"167\">Time of payment<\/td>\n<td width=\"167\">The cash bonus is subject to personal income tax (PIT)\/wage tax (WT) at the highest PIT\/WT rate (up to 49.5% in 2026, which includes social security charges)<\/td>\n<\/tr>\n<tr>\n<td width=\"167\">SARs<\/td>\n<td width=\"167\">The moment on which an unconditional right to the payment under the SAR occurs<\/td>\n<td width=\"167\">Any payment pursuant to the SAR is subject to PIT\/WT.<\/td>\n<\/tr>\n<tr>\n<td width=\"167\">Stock option\/ESOP<\/td>\n<td width=\"167\">The moment on which the stock becomes tradable (general rule) or the moment the option is exercised (optional)<\/td>\n<td width=\"167\">The PIT\/WT tax base would be the fair market value (FMV) of the stock (at the taxable moment) minus the exercise price<\/td>\n<\/tr>\n<tr>\n<td width=\"167\">Stock\/RSU\/<\/p>\n<p>PSU<\/td>\n<td width=\"167\">The moment on which an unconditional right to delivery of the stock occurs<\/td>\n<td width=\"167\">The taxable base would be the delta between the FMV of the stock (at the taxable moment)\u00a0 and the cost price of the stock for the employee (if any)<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p><strong>Tax treatment after receipt<\/strong><\/p>\n<p>After a Dutch employee receives stock under any of the MIP types described above, the following PIT treatment applies depending on the qualification of the interest:<\/p>\n<ul>\n<li>No substantial interest, taxed as savings and investments (box 3):<br \/>\n&#8211; Box 3 is currently based on a notional return as opposed to the actual return (6.% for shares). This notional return is taxed yearly at 36%.<\/li>\n<li>Substantial interest (box 2):<br \/>\n&#8211; Generally applicable in case of a &gt;5% interest (also in case of 5% in a class of shares). Income and capital gains are taxed at 24.5% for income up to EUR 68,843 and 31% for the excess in 2026.<\/li>\n<li>Carried interest (box 1):<br \/>\n&#8211; In case an investment qualifies as a carried interest, income from such investment is taxed as income from employment (box 1) at a maximum rate of 49.5%. Determining whether an investment qualifies as a carried interest is complex. In essence, this may be applicable if the investment may result in a return which is not available for regular investors. The investment generally includes some type of leverage mechanism which results in a disproportional return compared to the amount of the investment (for example Ratchets and Strips (Sweet Equity)). The tax treatment of a carried interest is highly structurable, and if executed correctly, a treatment as substantial interest at a lower rate may be possible.<\/li>\n<\/ul>\n<p>In each case, dividend withholding tax would be due on dividend distributions to the employee. However, this can typically be credited against the PIT of the employee.<\/p>\n<p><strong>\u00a0Tax treatment loan<\/strong><\/p>\n<p>If the participation in the incentive plan would be financed by a loan, it should be safeguarded that the conditions (the interest rate in particular) are at arm&#8217;s length terms. If the interest rate paid by the employee is too low, the delta between a market rate interest and the interest paid by the employee, typically constitutes taxable wage. In some cases, such delta could be dealt with under the &#8220;work related costs scheme (werkkostenregeling\/WKR)&#8221;, which may (partially) mitigate the WT.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the tax and social security consequences for companies operating an incentive plan? (i)\ton grant; (ii) on vesting; (iii) on exercise; (iv) on the acquisition, holding and\/or disposal of any underlying shares or securities; (v) in connection with any loans offered to participants (either by the company operating the incentive plan, the employer of the participant (if different) or a third party) as part of the incentive plan.<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The WT and social security consequences generally align with the employee tax treatment as described above. The plan documents usually include (indemnity) provisions which allocate all potential tax consequences to the employee.<\/p>\n<p>For companies operating an incentive plan, the most important tax consequence to consider is the corporate income tax (CIT) deductibility of the various incentive options. In general, cash related incentives (such as a cash bonus and SARs to the extent the employee&#8217;s salary receiving the SAR remains below the EUR 728,000 threshold) are deductible for CIT purposes. Stock related incentives (such as options, RSUs and PSUs) are generally not deductible for CIT purposes.<\/p>\n<p>Finally, if there is a WT element in an employer loan (due to an interest rate or waiver which is not at arm&#8217;s length), the interest delta or waiver is typically deductible for CIT purposes.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the reporting\/notification\/filing requirements applicable to an incentive plan?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>There are no specific reporting\/notification\/filing requirements applicable to incentive plans in the Netherlands. However, if certainty in advance would be obtained by a tax payer to confirm a specific tax treatment of an incentive plan in a tax ruling, this typically creates an obligation to actively and continuously disclose information to the DTA which relates to leavers, joiners, realised gains, changes in the company&#8217;s capital structure, etc.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Do participants in incentive plans have a right to compensation for loss of their awards when their employment terminates?  Does the reason for the termination matter?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Yes, participants in incentive plans may have a right to compensation for the loss of their awards upon termination of employment, particularly if the termination is without reasonable ground or if the employer has acted in a seriously culpable manner. If an employee is dismissed without a reasonable ground or if the employer acts seriously culpably, the employee can claim a so-called fair compensation (the so-called billijke vergoeding). There is no fixed formula to calculate the fair compensation. The amount depends on all circumstances of the case, including the wages that the employee would have earned if the employment agreement had continued, the degree to which the employer acted seriously culpably, and whether the employee has found other employment or is expected to find any employment in the future, and the expected income received therefrom.<\/p>\n<p>Dutch case law shows that if an employee participates in an ESOP, has been granted with RSUs, or other similar participations, these are taken into account when determining the fair compensation. For example, if certain options would have vested within 6-12 months, and the court assesses that the employment agreement would have lasted at least 6-12 months if the employer would not have terminated the employment agreement, the value of these awards that would have vested are added to the amount of fair compensation.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Do any data protection requirements apply to the operation of an incentive plan?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>For the operation of the incentive plan, personal data is being processed. This is only possible if the employer can rely on one of the legal grounds for processing personal data as set forth in the GDPR. Although consent is a legal ground for processing personal data, it is advisable to use one of the other legal grounds, as it is deemed questionable whether consent can be freely given by an employee given the imbalanced relationship (and, therefore, whether it constitutes a legitimate ground for processing in this context). Furthermore, the consent can always be revoked by the employee. Therefore, it is typically advised to include that the processing is necessary for the execution of the plan or is necessary for the legitimate interest of the employer and\/or employee, which are both valid legal grounds under the GDPR. This is often included in an employee privacy notice.<\/p>\n<p>On a separate note, if the personal data is transferred to a foreign (non-EU) entity, there should be an intragroup sharing agreement in place between the foreign entity and the Dutch entity for the sharing of personal data.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any corporate governance guidelines that apply to the operation of incentive plans?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The Dutch Corporate Governance Code provides principles and best practice provisions for managing and supervising Dutch listed companies. For example, this includes alignment with long-term value creation, transparency and disclosure of policies and shareholders engagement.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any prospectus or securities law requirements that apply to the operation of incentive plans?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Broadly, granting or issuing transferable securities to an employee can trigger the obligation to prepare a prospectus subject to the EU Prospectus Regulation, as applicable in the Netherlands. However, there are certain key exemptions relevant to incentive plans. These include:<\/p>\n<ul>\n<li>Employee share schemes exemption: exempts securities offered, allotted or to be allotted to existing or former directors or employees by their employer or by an affiliated undertaking, provided that the company has its head office or registered office in the EU or is listed on an EU regulated market.<\/li>\n<li>Small offer exemption: exempts offers of securities to the public with a total consideration in the EU of less than \u20ac1 million, calculated over a period of 12 months.<\/li>\n<li>Limited number of persons exemption: exempts offers of securities addressed to fewer than 150 natural or legal persons per EU Member State, other than qualified investors.<\/li>\n<li>Not transferable securities: if the incentive plans instruments do not qualify as a transferable security, the prospectus and securities laws do not apply, however:<br \/>\n&#8211; if share options are non-transferable but can be exercised to acquire shares that are transferable, the underlying shares would be considered transferable triggering prospectus and securities laws.<br \/>\n&#8211; while the initial grant of share options might not trigger requirements for a prospectus (if they are not transferable and do not constitute a security in their own right) the subsequent issuance of shares upon exercise of the options may do so.<\/li>\n<\/ul>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Do any specialist regulatory regimes apply to incentive plans?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Yes. For the Dutch financial sector, specific remuneration rules apply that also can impact incentive plans when the incentive plans involve for instance bonusses, payments in shares or share-linked instruments and retention payments. These include:<\/p>\n<ul>\n<li>Bonus Cap: a bonus cap is set at 20% of the fixed annual remuneration for employees of financial undertakings. This cap is stricter compared to most EU-wide caps of 100% (or 200% in some cases), however, limited exemptions are available for certain financial undertakings and specific staff.<\/li>\n<li>Clawback and malus provisions as set out above under paragraph 8.<\/li>\n<li>Deferral and payment in instruments: a significant portion of variable pay must be deferred for a period of at least five years. Additionally, a portion of the variable remuneration must be paid in instruments such as shares or share-linked instruments, which are subject to an appropriate retention policy<\/li>\n<\/ul>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any exchange control restrictions that affect the operation of incentive plans?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>There are no foreign exchange controls in the Netherlands.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What is the formal process for granting awards under an incentive plan?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The formal process for granting awards under an incentive plan is often structured as follows:<\/p>\n<p>1. Setting up the plan: the incentive plan is designed, reviewed, and approved (by the management board). For publicly listed companies, shareholder approval is typically required. The set-up process may also include amending the company&#8217;s capital structure, the incorporation of a STAK (in case of depositary receipts), personal holding companies and\/or pooling entities depending on the desired tax treatment.<\/p>\n<p>2. Granting the awards: the eligible employees are identified, and specific awards are determined based on the stipulated criteria. The proposed awards are then reviewed and approved (commonly by a designated committee). Envisaged participants receive award agreements detailing the terms and conditions of their grants.<\/p>\n<p>3. Administering the plan: the company maintains detailed records of all awards and monitors criteria and vesting conditions.<\/p>\n<p>4. Exercise and settlement: once the awards are vested, the participants may be able to exercise their stock options or receive their shares. The company provides support for the exercise process and issues the shares or cash equivalent to the participants, coordinating with relevant administrators as needed.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Can an overseas corporation operate an incentive plan?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Yes. From a Dutch civil law perspective, it is in general possible that a foreign company operates an incentive plan for employees in the Netherlands. However, the incentive plan should be compliant with mandatory Dutch employment law. In practice, the plan is reviewed and a specific country annex is included to ensure compliance.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Can an overseas employee participate in an incentive plan?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Yes. From a Dutch civil law perspective, it is in general possible that a foreign employee participates in an incentive plan of a Dutch entity. However, the company must ensure that the incentive plan complies with the employment laws of the country where the foreign employee is based.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">How are share options or awards held by an internationally mobile employee taxed?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The tax treatment is highly dependent on a variety of factors such as the incentive type, the jurisdictions involved, time spent in the various jurisdictions, applicable tax treaties and the position of the employee.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">How are cash-based incentives held by an internationally mobile employee taxed?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Again, the tax treatment is highly dependent on a variety of factors such as the incentive type, the jurisdictions involved, time spent in the various jurisdictions, applicable tax treaties and the position of the employee.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What trends in incentive plan design have you observed over the last 12 months?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Cash based incentives gain popularity due to the CIT deductibility advantages and their straight-forward set-up process (e.g. no valuations, changes in capital structure or set-up of various holding\/pooling entities are required). However, stock based incentives remain popular due to their stronger alignment as employees have actual &#8216;skin in the game&#8217;. In this respect, reverse vesting schemes are particularly popular among C-suite executives (as a significant investment is required upfront), which enables to benefit from a lower valuation upfront.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the current developments and proposals for reform that will affect the operation of incentive plans over the next 12 months?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p><strong>Box 3 overhaul<\/strong><\/p>\n<p>The upcoming overhaul of the Dutch tax on savings and investments (box 3) as of 2028 is currently a hot topic in the Netherlands. Especially in private equity (where participants may receive a significant ROI), it is particularly favourable to structure employee incentives in box 3 due to the notional return which form the basis for the current box 3 system.<\/p>\n<p>However, this notional system in box 3 has become legally untenable following rulings by the Dutch Supreme Court. Therefore, the legislative proposal &#8220;Actual Return Box 3 Act (Wet werkelijk rendement box 3)&#8221; has been introduced and was adopted by the Lower House of Parliament in January 2026 despite the various objections in terms of complexity, implementation and technical abilities of the Dutch tax authorities. This new box 3 system aims to tax the actual return, consisting of a direct return (such as interest and dividends) and indirect return (such as the increase in value of shares). The value increase of shares would, in principle, be taxed annually. However, for shares in start-ups, a capital gains tax would be applied (i.e. not taxed annually but at the end of the holding period, for example, upon sale of the shares).<\/p>\n<p>Due to this new box 3 system, a restructuring of current box 3 incentive plans into a box 2 structure could result in significant tax savings.<\/p>\n<p><strong>Start-up\/scale-up options<\/strong><\/p>\n<p>In 2026, a draft bill is expected to be introduced to facilitate option schemes. In the new scheme, the tax burden on options for employees of startups and scale-ups will be reduced from the current 49.5% to a maximum of 32.17%. This is achieved by taxing only 65% of the benefit derived from employee stock options. In addition, under these new rules, the taxable moment may be postponed to the moment of sale of the underlying shares.<\/p>\n<p>The proposed effective date of this bill should be 1 January 2027 (although this date may be deferred depending on the progression of the legislative process).<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\r\n<div class=\"word-count-hidden\" style=\"display:none;\">Estimated word count: <span class=\"word-count\">3508<\/span><\/div>\r\n\r\n\t\t\t<\/ol>\r\n\r\n<script type=\"text\/javascript\" src=\"\/wp-content\/themes\/twentyseventeen\/src\/jquery\/components\/filter-guides.js\" async><\/script><\/div>"}},"_links":{"self":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/comparative_guide\/127892","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/comparative_guide"}],"about":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/types\/comparative_guide"}],"wp:attachment":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/media?parent=127892"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}