On 4 April 2022, the Dutch State Secretary of Finance confirmed to proceed with the adoption process of a legislative proposal changing the taxation rules of employee stock option plans.
With a view to a further increasing of the attractiveness of the Dutch tax system (especially for start-ups and scale-ups), new rules were introduced related to the levy of wage tax and personal income tax in case of employee stock option plans. Based on the legislative proposal, the moment of taxation of share options may be shifted – at the option of the employee – from the moment of exercise to the moment when the shares acquired on exercise is (deemed to be) available for trade, subject to certain conditions.
The change of the moment of taxation to the moment when shares acquired on exercise is (deemed to be) available for trade is aimed to reduce liquidity and cash-flow disadvantages. Under current rules tax is due on the moment of exercise regardless of (contractual) restrictions to dispose the acquired shares.
The employer will remain liable to withhold the wage tax (and in some cases social security contributions) on the moment of exercise of the option, the sale or moment the option is (deemed to be) available for trade.
The new rules will apply to stock option plans offered by privately- and publicly held companies, but certain additional conditions will apply for such plans of publicly held companies.
The legislative proposal originally was part of the 2022 Tax Package (see our tax alerts of 15 September and 28 October 2021). The adoption was postponed due to concerns on possible abuse and implementation difficulties. After a review of possible improvements, it was decided to continue with the original legislative proposal. The envisaged date of entry into force of the legislative proposal will be changed to 1 January 2023.
If you have any questions regarding the above, please do not hesitate to contact us.
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