On September 21, 2021 it was Budget Day in the Netherlands. The Dutch government published its tax proposals for 2022 and onwards and some other tax measures, some of which had already been announced. The following affect Employers and their employees directly:
Based on current legislation, a stock option is taxed when such right is exercised. A problem that arises especially in cases of start-ups and scale-ups is that the owners of the option rights do not always have sufficient funds available to pay the tax at the moment of exercising the options. This makes it less attractive to use share option rights as a form of remuneration. Stock option rights are a useful instrument to attract and keep personnel, especially for start-ups and scale-ups.
With the proposed legislation, taxation is shifted from the moment of exercising the option to the moment when the shares obtained as a result of exercising an option become tradeable. In that case, shares can be sold to generate cash to pay tax. The tax is due on the difference between the value of the shares at that moment and the acquisition price.
If shares are not immediately tradeable at the moment of exercising the option right, the employee can opt to pay tax on the value of the shares at that moment (provided that the employee has sufficient funds available). This choice has to be made by the employee in writing, ultimately at the moment of exercising the option. The withholding agent should keep this confirmation in its wage tax administration.
Further rules may be introduced or specific situations. Especially since the possibilities of trading shares of non-listed entities are usually different from trading shares of listed entities.
Robin Schalekamp
robin.schalekamp@bdo.nl