In the Netherlands, when an employee acquires shares under an incentive plan (acquired shares), the benefit of participating in such a plan will typically be taxed by way of income from employment.
An employee’s acquired shares will normally be included in the employee’s yield basis (rendementsgrondslag) for the regime of savings and investments (inkomen uit sparen en beleggen). Note that the position differs for Dutch employees holding a “lucrative interest” (lucratief belang) or a “substantial interest” (aanmerkelijk belang) in the employer’s Dutch corporation.
Under the current regime on savings and investments in the Netherlands, the employee is not taxed on actual dividends or capital gains realised on the sale of acquired shares. Instead, the employee is taxed at a flat rate of 30% on deemed income from savings and investments. This deemed income ranges from 1.935% to 5.60% of the Dutch employee’s yield basis (which includes the acquired shares), less a tax-free threshold, at the beginning of the calendar year.
What are the changes?
The Dutch government recently announced that it intends to submit a bill before summer 2020 which would result in a modification of the regime on savings and investments.
The revised tax regime would become effective from 1 January 2022 and would see the yield basis divided into three categories:
1. Savings: This includes deposits, such as bank account savings and term deposits.
2. Other Investments: This includes all other investments, such as stock investments, including the Acquired Shares.
3. Debts: This includes all debts in the savings and investments regime, such as to a personal holding company and debts attributable to the savings and investments regime.
Under this regime, the taxable income would be computed as follows:(amount of savings x 0.09%) + (amount of other investments x 5.33%) -/- (amount of debts x 3.03%) = taxable income from savings and investments
Instead of the tax-free threshold (which under the current regime serves as a deduction from the yield basis), under the revised regime taxable income will also be recognised in respect of assets below the threshold amount. This taxable income (less an exemption of €400) is subject to tax at a rate of 33%.