Dutch Tax Plan 2027

Foreign exchange results on hedging instruments under the participation exemption

The 2027 Tax Plan codifies new rules governing foreign exchange (FX) results on instruments used to hedge currency risks associated with participations qualifying for the participation exemption (deelnemingsvrijstelling). The proposal follows the Supreme Court’s judgment of 21 March 2025 on the deductibility of liquidation losses and addresses the resulting budgetary impact.

The proposed rules distinguish between ‘priced-in’ and ‘unpriced’ FX results on hedging instruments. The priced-in FX result is the portion of the FX result on the hedging instrument that is factored into the terms of the hedging instrument at inception – for example, the interest rate differential between a foreign currency loan and a comparable euro-denominated loan, or the difference between the spot rate and the forward rate in a forward currency contract. The unpriced FX result is the difference between the anticipated currency movement (priced-in at inception) and the actual currency movement at settlement. Under the proposed rules, priced-in FX results on hedging instruments will no longer qualify for the participation exemption and will therefore be taxable. By contrast, unpriced FX results may, upon the taxpayer’s election, continue to be covered by the participation exemption.

The proposed rules add considerable complexity to the treatment of FX hedging instruments. In practice, taxpayers will need to carefully assess and document whether FX results are priced-in or unpriced, and make timely elections where appropriate. For further background, please see our publication on the public consultation.

Expansion of the innovation box lump-sum regime

The Tax Plan increases the lump-sum threshold under the innovation box (innovatiebox) from EUR 25,000 to EUR 100,000 with effect from 1 January 2027. The innovation box allows qualifying profits from self-developed intangible assets to be taxed at an effective rate of 9%. The increase makes the regime more accessible to SMEs.

Abolition of the non-business purpose presumption in the business merger and demerger facilities

In its judgment of 27 February 2026, the Supreme Court held that the presumption of a non-business purpose in the corporate income tax facilities for business mergers (bedrijfsfusie) and legal demergers (juridische splitsing) is incompatible with the EU Merger Directive (2009/133/EC). Under the current rules, a transaction is presumed not to have a valid business purpose if, within three years before or after the transaction, the ultimate beneficial ownership of the taxpayer or the acquired undertaking changes. In response to that judgment, the Miscellaneous Fiscal Measures Act 2027 proposes to abolish the presumption. The burden of proving that a transaction lacks a valid business purpose will thereby rest with the tax authorities.

This is a welcome development for taxpayers. The abolition of the presumption aligns the Dutch rules with EU law and restores a more balanced burden of proof. The tax authorities will now need to substantiate their position that a transaction lacks a valid business purpose, which should reduce uncertainty in reorganisation processes.

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

Following the Supreme Court’s judgment of 13 September 2024, the OFM 2027 introduces a refund scheme for Dutch underlying investors in foreign investment funds. The scheme eliminates the disadvantage faced by Dutch investors in non-Dutch investment institutions compared with investors in Dutch fiscal investment institutions (fiscale beleggingsinstellingen), which may pass on dividend withholding tax credits to their investors.

The introduction of this refund scheme is a direct response to EU law requirements following the Supreme Court’s ruling. Dutch investors in foreign investment funds should assess whether they may be entitled to a refund under the proposed rules.

Determination of the acquisition price upon a company’s transfer of seat to the Netherlands

The OFM 2027 clarifies the rules for determining the acquisition price of shares held by a substantial interest holder when a company’s seat is transferred to the Netherlands. The acquisition price will be set at the fair market value of the shares at the time of the transfer, codifying the starting point for Dutch Box 2 taxation.

This provides legal certainty for substantial interest holders whose companies relocate to the Netherlands, ensuring that pre-migration gains are not subject to Dutch Box 2 tax.

Proposed amendments to the future Box 3 system

The government has announced that it is preparing amendments to the Box 3 actual return system (Wet werkelijk rendement box 3). Those amendments are being developed in a separate bill and do not form part of the current Budget Day legislative package. The announced adjustments include:

• a reduction in the Box 3 rate from 36% to 35%;
• an increase in the tax-free return threshold from EUR 1,800 to EUR 1,900;
• a one-year carry-back facility for negative returns; and
• further development towards a capital gains tax model for certain categories of assets.

These adjustments are intended to improve the workability and proportionality of the new Box 3 system, which is expected to enter into force in 2028. Although the proposed rate reduction and higher threshold would benefit taxpayers, the transition to an actual-return system will require significant administrative preparation. CMS will monitor the separate legislative process.

Statutory definition of start-ups and scale-ups

The Wet fiscale stimulering start-ups en scale-ups introduces a statutory definition of a start-up and a scale-up. The definition applies for purposes of the new employee share option regime and the forthcoming Box 3 actual return system. A company qualifies as a start-up or scale-up if it operates a scalable and repeatable business model based on innovation, is not listed on a regulated market, and no more than 25% of its shares are held by a listed entity. The definition takes effect on 1 January 2027.

Employee share options for start-ups and scale-ups

The Wet fiscale stimulering start-ups en scale-ups introduces a special tax regime for employee share options granted by qualifying start-ups and scale-ups. The principal features are as follows:

• Deferred taxation – The tax point will move from the date on which the shares acquired on exercise of the option become tradable to the date on which those shares are actually disposed of. Employees may elect to be taxed earlier.
• Reduced tax base – Only 65% of the benefit realised on disposal, after deduction of the exercise price, will be included in the wage tax base. This corresponds to an effective wage tax rate of approximately 32%.
• RVO certification – The employer must hold a valid decision from the Netherlands Enterprise Agency (RVO) confirming its status as a start-up or scale-up. The decision is valid for eight years and may be renewed up to three times for five years each, resulting in a maximum qualifying period of 23 years.
• State aid approval – The regime constitutes State aid within the meaning of Article 107(1) TFEU and shall be subject to prior approval by the European Commission. The proposed entry into force on 1 January 2027 is conditional on that approval.
• Transitional application – Subject to the transitional provisions, the regime is intended to apply retrospectively to share options granted on or after 17 April 2025, provided that no wage tax has been levied on those options by 31 December 2026.
• Parent company options – Share options granted to employees of a Dutch start-up or scale-up in a parent company also qualify for the 65% base reduction, provided both the subsidiary and the parent company hold an RVO decision.
• Proportional application – The 65% base reduction applies only to the portion of the value increase that exceeds the fair market value of the underlying shares at the time of grant (a ‘to the extent’ provision rather than ‘all or nothing’).
• Two-year holding period – The two-year restriction applies between the grant date and the disposal of the shares (rather than between grant and exercise of the option).
• Certificates of shares – The regime also applies to participation rights that are substantially equivalent to shares, such as options on share certificates (certificaten van aandelen).

The regime enhances the ability of Dutch start-ups and scale-ups to attract and retain talent through a more competitive equity compensation framework. Companies considering employee share options should assess whether they satisfy the qualifying criteria and apply for RVO certification in good time. The conditional entry into force pending EU State aid approval should be factored into implementation planning.

Reduction of the general RETT rate for non-owner-occupied residential property

The Tax Plan proposes to reduce the general real estate transfer tax (RETT) rate from 8% to 7% for acquisitions of residential property that do not qualify for the reduced 2% owner-occupier rate. The reduction applies to all non-owner-occupied residential property, including investment and buy-to-let properties, with effect from 1 January 2027.

The rate reduction is intended to stimulate investment in rental housing and support construction activity. Investors should factor this into the economics of planned and existing acquisitions.

Proposed exemption from the earnings-stripping measure (ATAD)

The government has announced an exemption for housing corporations from the interest-deduction limitation under the earnings-stripping rules implementing the EU Anti-Tax Avoidance Directive (ATAD). The exemption will take effect on 1 January 2028. The earnings-stripping rules – which were originally designed to prevent base erosion by multinationals – also apply to housing corporations. The sector has long argued that this is disproportionate given the nature and public mission of housing corporations, as the purpose of the ATAD rules is to prevent profit shifting to low-tax jurisdictions. By including the measure in the 2027 Tax Plan, corporations will be able to factor in the resulting lower tax burden and increased financial capacity in their investment plans ahead of time.

RETT exemption for transfers of social housing stock (DAEB dwellings)

The Tax Plan introduces a new RETT exemption for transfers between housing corporations of dwellings falling within their public housing mandate (DAEB-woningen). The exemption facilitates transfers of social housing stock between corporations in connection with their solidarity obligations under the National Performance Agreements 2025-2033 (Nationale Prestatieafspraken), removing a tax barrier to inter-corporation transfers.

The RETT exemption for inter-corporation transfers of social housing is a sensible measure that supports the policy objective of optimising the allocation of social housing stock. Housing corporations engaged in portfolio rationalisation or solidarity transfers should assess whether planned transactions may benefit from this exemption.

Pillar Two and the Minimum Tax Act 2024

A separate bill, the Safe Harbour Rules under the Minimum Tax Act 2024 (Wet veiligehavenregels Wet minimumbelasting 2024), implements four internationally agreed Pillar Two safe harbours under the OECD/Inclusive Framework’s Side-by-Side package. These include the simplified effective tax rate (SETR) safe harbour, the qualified domestic minimum top-up tax (QDMTT) safe harbour, and safe harbours based on qualified financial statements. The rules simplify compliance for multinational groups and apply with retroactive effect to specified reporting years.

The introduction of statutory safe harbour rules is a welcome development for multinational groups navigating Pillar Two compliance. The safe harbours can significantly reduce the administrative burden for groups operating in jurisdictions with effective tax rates that are clearly above or below the 15% minimum. Groups within the scope of the Minimum Tax Act 2024 should assess whether they can benefit from these simplification measures for their relevant jurisdictions and reporting years.

Other measures

The 2027 Tax Plan and the related legislative proposals contain several additional measures. The following are of particular relevance:

• Limited application of the table correction factor: The annual inflation adjustment (table correction factor) for various tax brackets and thresholds will be applied on a limited basis in 2027 and 2028, in accordance with the coalition agreement.
• Phasing out of the starter’s deduction: The starter’s deduction (startersaftrek) for self-employed entrepreneurs will be reduced from EUR 2,123 to EUR 10 in 2027 and abolished from 2028.
• Increase of the tax-free travel allowance: The tax-free travel allowance will increase to EUR 0.25 per kilometre, with retroactive effect from 1 January 2026.
• Pseudo-final levy on employer-provided fossil-fuel vehicles: A pseudo-final levy (pseudo-eindheffing) will apply from 2027 to employer-provided fossil-fuel vehicles, subject to transitional and anti-cumulation rules.
• Increase of the energy investment deduction (EIA): The EIA deduction percentage will increase from 40% to 45.5% with effect from 1 January 2027. This measure forms part of the energy shock package.
• Abolition of the forestry exemption: The forestry exemption (bosbouwvrijstelling), which currently exempts profits from forestry businesses from income tax and corporate income tax, will be abolished with effect from 1 January 2029.
• Phasing out of the co-working spouse deduction and cessation-of-business deduction: The co-working spouse deduction (meewerkaftrek) and cessation-of-business deduction (stakingsaftrek) will be reduced by 75% from 2027 and abolished in full from 2030. These measures are intended to fund the fiscal incentives for start-ups and scale-ups.

The 2027 Tax Plan and related proposals will be considered by both chambers of the Dutch Parliament over the coming months. Given that the current cabinet is a minority government, the proposals remain subject to amendment during the legislative process. CMS will report on material developments.

Would you like to know more or exchange ideas regarding this publication? Please contact us, we look forward to discuss this with you.