Netherlands: Proposed employee share option rights tax measure postponed

The effective date of employee share options rights tax measure postponed until 1 January 2023

Effective date of employee share options rights tax measure postponed until January 2023

The Deputy Minister of Finance announced on 4 April 2022 that the effective date of the employee share options rights tax measure proposed as part of the 2022 Tax Plan package will be postponed until 1 January 2023, but the proposal remains otherwise unchanged.

The 2022 Tax Plan package was presented to the lower house on “Budget Day” (21 September 2021) and included various proposed changes with regard to payroll tax and social security contributions generally intended to be effective 1 January 2022. Read TaxNewsFlash

Among the proposals included in the 2022 Tax Plan was the introduction of a new manner in which employee share option rights are included in payroll tax and social security contributions. Under current legislation, share option rights become taxable when the options are disposed of or exercised, even if the shares acquired by exercising the options cannot immediately be sold. Under the proposal, an employee can elect to defer taxation until the acquired shares become tradable (i.e., when any sale restrictions are lifted), on the then-applicable value.

The Lower House of Parliament expressed concerns about both the costs of enforcement and the generic application of the proposal. Various options have been explored during the past few months to address those concerns, including:

  • Restricting the application of the proposals to enterprises of a certain size
  • Excluding director-major shareholders and executive directors from the elective regime

The government thus has postponed the effective date of the proposal to give Parliament additional time to debate the measure.

Read an April 2022 report prepared by the KPMG member firm in the Netherlands


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