Dutch Tax Plans 2027: a predictable package in a minority government setting

On 15 September 2026, Budget Day, the Dutch government presented the Tax Plans 2027. The proposals are broadly in line with the measures previously announced and contain no notable changes. However, as the government does not hold a parliamentary majority, additional tax measures could emerge during the legislative process as part of broader political negotiations. Subject to parliamentary approval, the proposals will enter into force as of 1 January 2027, unless indicated otherwise. 

For corporate taxpayers relevant proposals include the implementation of the Side-by-Side package in the Dutch Minimum Tax Act 2024 with retroactive effect to 1 January 2026 and the changes in the application of the participation exemption to foreign currency hedging instruments.

The government continues to emphasise innovation as a key policy objective. Hence, the tax package includes an increase of the innovation box simplified regime threshold for SMEs. In addition, a separate bill has been presented to improve the tax treatment of employee share options for employees of innovative start-ups and scale-ups.

This publication discusses these and several other proposed measures in more detail. It also covers a number of measures enacted last year that will take effect on 1 January 2027, as well as the current status of certain other noteworthy tax developments.

Corporate income taxes

Changes in application of participation exemption to foreign currency hedging instruments

Proposal
Under current law, foreign exchange results derived from an instrument aimed at hedging a currency risk incurred with a qualifying participation are exempt from Dutch corporate income tax pursuant to the participation exemption in case prior approval is obtained from the Dutch tax authorities.

The foreign exchange result on hedging instruments typically includes an expected currency movement that is already reflected in the instrument’s pricing, for example through a higher or lower interest rate compared to a comparable EUR interest rate. The legislator observes that this creates a mismatch: the currency-related interest rate differential is deductible, while the corresponding expected foreign exchange gain on the instrument is exempt (or vice versa in case of a negative interest rate differential).

To eliminate this mismatch, the proposal limits the exemption to foreign exchange results that were not reflected in the pricing of the instrument. Expected or “priced-in” foreign currency results would therefore become taxable. The priced-in result is determined based on (i) the difference in interest rates between the relevant foreign currency and the taxpayer’s own currency if the hedging instrument has a principal amount (such as a loan), or (ii) the difference between the spot and forward rates if it does not (such as a non-deliverable FX forward). This also applies if the priced-in foreign exchange result is embedded in the agreed forward rate. The unexpected result is the difference between the actual and priced-in result, which can remain tax-exempt.

For example, where a USD loan is used as a hedge of a USD participation held by a taxpayer with EUR as functional currency, the portion of the FX result that was already reflected in the EUR/USD interest rate differential would become taxable rather than being exempt.

The legislative proposal also addresses certain formal issues identified in practice. For example, taxpayers should be able to designate a hedging instrument as tax-exempt after its conclusion or revoke an existing designation, in both cases prospectively from the date a complete request is submitted or a later date if requested.

Transitional rules are proposed to provide that priced-in results accrued on existing hedging instruments before 1 January 2027 would remain tax-exempt. In addition, existing hedging instruments designated as tax-exempt before 15 September 2026 (or for which a complete request was filed before that date) are grandfathered until the end of 2027.

Impact
The proposal would introduce fundamental changes to the treatment of tax-exempt hedges. Although a more balanced outcome is intended, new mismatches may arise, including where interest deduction is restricted under interest limitation rules. The changes would also result in additional complexity as hedging results would need to be split into a taxable and non-taxable component. Several practical questions remain unanswered, including how the rules apply to hedging instruments other than loans and FX forwards such as currency options or cross-currency swaps.

Taxpayers with tax-exempt hedges should review whether grandfathering applies and assess the additional compliance burden associated with identifying and documenting the taxable and tax-exempt components of hedging results.

Removal legal presumption of abuse for legal demergers and business mergers

The application of the legal demerger facility in the Dutch Corporate Income Tax Act is subject to an anti-abuse provision entailing that the facility does not apply if the demerger is predominantly aimed at avoiding or deferring taxation. In addition, this provision embodies the legal presumption that valid business reasons for a demerger are deemed absent if shares in the demerging or demerged company are transferred to a third-party within three years after the demerger. Because of this legal presumption, the taxpayer has to demonstrate that there are valid business reasons, or that the demerger was not predominantly aimed at tax avoidance or deferral, in case of such transfer within three years.

On 27 February 2026, the Dutch Supreme Court ruled that this legal presumption of abuse is incompatible with the EU Merger Directive. See our website post for more details. Following this ruling, it is proposed in the Tax Plans 2027 to remove this legal presumption from the CITA for legal demergers and business mergers.

This however does not mean that an (envisaged) third-party sale is no longer relevant. Such a sale may still play a role in the tax authorities’ assessment that the demerger is predominantly aimed at avoiding or deferring taxation and/or not driven by business reasons, if supported by additional facts and circumstances.

In addition, under the current rules, a company involved in a reorganisation may obtain an advance ruling on whether a disposal occurring within three years after the reorganisation is considered to be aimed at the avoidance or deferral of taxation. The tax inspector decides on this matter by means of a decision that is open to objection and appeal. Because of the removal of the legal presumption, it is also proposed to abolish the possibility of obtaining this advance ruling.

Increase of the innovation box simplified regime threshold

The Dutch innovation box regime allows qualifying income from self-developed intangible assets to be effectively taxed at a reduced effective tax rate of 9% (instead of the regular corporate income tax rates). The innovation box includes an optional simplified regime designed to reduce administrative burdens for smaller innovative businesses. Under the current rules, taxpayers may elect to treat 25% of their taxable profit as qualifying innovation income, subject to a maximum amount of EUR 25,000 per year.

The government proposes to increase this maximum amount from EUR 25,000 to EUR 100,000 as of 1 January 2027. This proposal follows the recent evaluation of the innovation box, which concluded that the current threshold is too low to make the simplified regime attractive in practice.

By substantially increasing the cap, the government aims to make the innovation box more accessible for SMEs and to reduce the administrative effort associated with determining the amount of income attributable to qualifying intellectual property.

Increase in the Energy Investment Allowance

The Energy Investment Allowance (EIA) is proposed to be increased from 40% to 45.5% as part of the Tax Plans 2027. The EIA, as well as the Environmental Investment Deduction (MIA) and the Arbitrary depreciation of environmental investments (Vamil), have previously been extended to at least 31 December 2028.

For more information on the proposed changes to energy and environmental taxes, we refer to our website post of 15 September 2026: Dutch Budget Day 2026: Energy, sustainability and environment measures.

Carve-out from the earnings stripping rule for housing associations

In the letter accompanying the Tax Plans 2027, the government announced that in a bill of amendment to the Tax Plans 2027, it will be proposed to exclude housing associations from the earnings stripping rule as of 2028. The earnings stripping rule is a general interest deduction limitation that restricts the deductibility of net borrowing costs exceeding a specified threshold. The proposed measure is intended to strengthen the financial position of housing associations.

By excluding housing associations from the earnings stripping rule, additional borrowing capacity is expected to become available, which should facilitate more favourable financing conditions and support future housing development projects.

Safe harbour rules added to Minimum Tax Act 2024

General

As part of the Tax Plans 2027, the Dutch government has proposed the Act implementing Safe Harbour Rules in the Minimum Tax Act 2024 (Wetsvoorstel veiligehavenregels Wet minimumbelasting 2024).

The proposal mainly implements the OECD/G20 Inclusive Framework's “Side-by-Side” package of 5 January 2026 into the Minimum Tax Act 2024 (MTA 2024). The MTA 2024 is the Dutch implementation of the OECD’s Pillar Two rules (GloBE Rules), introducing a 15% minimum tax for large multinational groups (MNE Groups) in each jurisdiction in which they operate.

The proposal introduces a number of new safe harbour rules intended to simplify the application of Pillar Two and address interactions between the GloBE Rules and equivalent tax systems, notably the U.S. tax system. 

Side-by-Side package
The proposal implements the safe harbour measures agreed as part of the OECD's Side-by-Side (SbS) package, which represents one of the most significant developments in the Pillar Two framework since the original GloBE Rules were released.

The SbS package is intended to facilitate the coexistence of the GloBE Rules with certain equivalent tax regimes – primarily the U.S. tax system – while simultaneously introducing simplification measures aimed at reducing the compliance burden for taxpayers and mitigating the effect of Pillar Two on certain tax incentives. For more details on the SbS package we refer to our earlier publication here.

Main elements of the proposal

The proposal introduces four new safe harbour rules into the MTA 2024:

• Simplified ETR Safe Harbour: a simpler effective tax rate (ETR) calculation that allows groups to avoid a full GloBE calculation and Top-up Tax for a jurisdiction. This safe harbour is available where the simplified ETR calculation shows an ETR of at least 15% or a loss in that jurisdiction. Notably, the proposal makes use of the SbS package option allowing taxpayers to calculate the simplified ETR based on the group's consolidated financial accounts rather than the local financial accounting standard, which may significantly reduce the compliance burden.
• SbS Safe Harbour: an MNE Group whose Ultimate Parent Entity (UPE) is located in a jurisdiction with a “Qualified Side-by-Side Regime” can elect to have its Top-up Tax under the IIR and UTPR reduced to zero. A qualified SbS Regime requires, among others, that the UPE jurisdiction has an eligible domestic and worldwide tax system. Currently, only the United States is considered to have such a Qualified SbS Regime.
• UPE Safe Harbour: an MNE Group whose Ultimate Parent Entity is located in a jurisdiction with a “Qualified UPE Regime” can elect to have its Top-up Tax under the IIR and UTPR reduced to zero in respect of the income arising in the UPE jurisdiction, rather than the MNE Group as a whole. The requirements for a jurisdiction to have a Qualified UPE Regime are similar to those for a Qualified SbS Regime, but do not require a worldwide tax system to apply in that jurisdiction. Currently, no jurisdiction has been designated as having a Qualified UPE Regime.
• Qualified Tax Incentive Safe Harbour: any Top-up Tax arising as a result of certain qualifying expenditure-based and production-based tax incentives is reduced to zero, subject to a substance cap. According to the explanatory memorandum, the Dutch innovation box does not qualify for this safe harbour, whereas the Dutch Energy Investment Allowance (EIA), Environmental Investment Deduction (MIA) and Small-scale Investment Deduction (KIA) do qualify.

UPE Safe Harbour: an MNE Group whose Ultimate Parent Entity is located in a jurisdiction with a “Qualified UPE Regime” can elect to have its Top-up Tax under the IIR and UTPR reduced to zero in respect of the income arising in the UPE jurisdiction, rather than the MNE Group as a whole. The requirements for a jurisdiction to have a Qualified UPE Regime are similar to those for a Qualified SbS Regime, but do not require a worldwide tax system to apply in that jurisdiction. Currently, no jurisdictions have been assessed as having a Qualified UPE Regime. The proposal also extends the existing transitional CbCR Safe Harbour by one year, as a result of which most taxpayers can use it for 2027 as well.

In addition to the SbS package, the proposal contains a technical amendment relating to the application of the Transitional UTPR Safe Harbour, as included in the OECD’s Administrative Guidance published on 11 May 2026. Under this amendment, the Transitional UTPR Safe Harbour also applies to 53-week fiscal years that begin on or before 31 December 2025 and end on or before 3 January 2027. This amendment ensures continuity of relief from the UTPR for certain MNE Groups with a 52- or 53-week fiscal year by preventing a gap between the expiry of the Transitional UTPR Safe Harbour and the application of the new SbS Safe Harbour.

Timing

The proposal is intended to enter into force on 1 January 2027. However, most measures would apply retroactively:

• The Netherlands intends to make use of the optional early adoption mechanism for the Simplified ETR Safe Harbour, allowing application for fiscal years beginning on or after 31 December 2025.
• The SbS Safe Harbour, UPE Safe Harbour and Qualified Tax Incentive Safe Harbour would apply for fiscal years beginning on or after 1 January 2026.

The transitional CbCR Safe Harbour is already applicable and would be extended by one year. As a result, this safe harbour would remain available for fiscal years beginning on or before 31 December 2027 and ending before 1 July 2029.

Impact

Consistent with previous amendments to the Minimum Tax Act 2024, the proposal closely follows the internationally agreed OECD framework. After implementation, this proposal aligns the MTA 2024 with the latest OECD guidance, with the exception of the September 2026 guidance released last week (see our website post here for more details). For taxpayers, the proposal introduces several welcome simplifications and clarifications in relation to the GloBE Rules. At the same time, it adds new optionality and technical complexity that MNE Groups will need to navigate carefully.

Withholding taxes

New refund procedure for Dutch domestic investors holding shares in a Dutch company through a foreign investment fund

On 6 and 13 September 2024, the Dutch Supreme Court issued two rulings denying relief from Dutch dividend withholding tax for foreign investment funds. These judgments reaffirmed the Supreme Court’s position that foreign investment funds do not qualify for the same tax treatment as Dutch funds operating under the fiscal investment institution (fiscale beleggingsinstelling, FBI) regime.

The Supreme Court nevertheless held that, under EU law, Dutch resident investors investing in Dutch portfolio shares through a foreign investment fund should not be subject to a higher economic tax burden than if the same investment were held through a Dutch FBI. However, under the current rules, Dutch resident investors generally cannot obtain relief for Dutch dividend withholding tax borne at the level of the foreign investment fund.

To address this issue, the Tax Plans 2027 introduces a new refund mechanism for Dutch resident individuals and entities that indirectly receive Dutch-source dividends through a foreign investment fund. Subject to certain conditions, eligible Dutch investors may claim a refund of Dutch dividend withholding tax borne at foreign investment fund level. The amount of the refund will generally be determined using a statutory formula, although investors may alternatively demonstrate that they suffered a higher economic tax burden than would have arisen had the investment been held through a Dutch FBI to cover a potential EU vulnerability.

Personal income taxes and employment taxes

Employee stock options in startups and scale-ups: proposed regime as of 2027

On 1 April 2026, the Dutch government opened a consultation on a new tax regime for employee stock options in startups and scale-ups, enhancing talent acquisition and bolstering the Dutch international competitiveness. Following this consultation, a bill on the fiscal stimulation of start-ups and scale-ups forms part of the Tax Plans 2027.

Key features of the proposed regime include:

• Deferral of Taxation: the taxation in respect of stock options may be deferred until the moment of actual disposal of the shares acquired through stock options. Under the current regime, taxation occurs at the latest when the shares become tradable, or earlier if the employee elects taxation at the time of exercise.
• Reduced Taxable Base: income will be taxed under Box 1, but the taxable base will be reduced to 65% of the proceeds, resulting in an effective tax rate comparable to that under Box 2. This reduction of the taxable base applies only insofar as the appreciation in the value of the shares exceeds the fair market value of the underlying shares (a “to-the-extent” provision).

This regime is applicable provided that certain conditions are met. In addition, eligibility for the new regime will require certification by the Netherlands Enterprise Agency (Rijksdienst voor Ondernemend Nederland, RVO). In this respect we note that, in contrast to the earlier proposal, the now proposed definition of “startups and scale-ups” enables foreign enterprises to submit an application to the RVO to obtain start-up or scale-up status.

For more information on this regime, the applicable conditions and the proposed definition of “startups and scale-ups” as well as information on some other proposed changes of employment taxes, we refer to our website post of 15 September 2026: Budget Day 2026: Rewards & Benefits changes for employers and employees.

Real estate transfer tax (RETT)

Reduction of RETT rate for residential investment properties

The Tax Plans 2027 propose a reduction in the real estate transfer tax applicable to investors from 8% to 7%, with effect from 1 January 2027. This reduction relates to the general transfer tax rate for residential properties and applies to acquisitions of dwellings (as opposed to other types of real estate) where the buyer will not use the property as their principal residence.

For more information on the proposed changes for the real estate market, we refer to our website post of 15 September 2026: Budget Day 2026: Real Estate Update | Loyens & Loeff

Other legislation as of 1 January 2027 / 1 January 2028

Dutch expat ruling as of 1 January 2027

The previously announced reduction in the tax-free allowance in Box 1 from 30% to 27% will take effect on 1 January 2027.

Taxation of lucrative interest as of 1 January 2028

In September 2025 an amended motion was submitted in parliament proposing an increase of Box 2 taxation for an indirectly held lucrative interest by grossing up Box 2 income. As a result, the lower Box 2 tax rate for lucrative interests will be increased to 28.45% (from 24.5%) and the higher Box 2 tax rate to 36% (from 31%).

This measure was initially included in the Tax Plans 2026 with intended effect from 1 January 2026, but its entry into force has been postponed to 1 January 2028 by way of an amendment, pending further investigation into the taxation of lucrative interests. The overall policy direction (closer alignment with the taxation of labour income) remains unchanged.

Current status of other noteworthy tax developments

Anti-fragmentation measures

In response to a parliamentary motion, the Dutch government reviewed anti-fragmentation measures to address perceived abuse of the earnings stripping rules, including (i) a group-based application of the earnings stripping threshold, (ii) a limitation of the threshold in cases of excessive group financing, and (iii) a specific anti-abuse rule for related-party debt.

However, in his letter of 8 June 2026, the State Secretary for Finance in which the measures were evaluated, he also announced that no such measures will be introduced in the near term, pending expected changes under the EU Taxation Omnibus proposal. For more details on the EU Taxation Omnibus proposal see our website post.

Legislative proposal for cross-border conversions

In October 2025, the Dutch government launched a public consultation on a legislative proposal to amend the existing tax rules governing (cross-border) conversions, following the introduction of the corresponding corporate law framework in 2023. While the proposal was generally well received, respondents called for further clarification and targeted amendments, particularly regarding the interaction between the liquidation and residence fictions and the treatment of cross-border conversions for dividend withholding tax purposes. The recently published EU Tax Omnibus proposal could also affect this legislative initiative, as it includes a deferral regime applicable to cross-border conversions. Although the proposal was included among the tax law proposals expected to be published in the near term, as set out in the strategic agenda of the State Secretary for Finance published in June 2026, no specific timeline was provided, unlike for the other proposals listed in the agenda.

FGR definition

As of 1 January 2025, the Dutch tax classification rules for partnerships were fundamentally amended. As a result, Dutch and foreign (limited) partnerships are currently, as a general rule, treated as transparent for Dutch tax purposes, unless they qualify as a fund for joint account (fonds voor gemene rekening, FGR).

In December 2025, the Dutch legislator launched a consultation on a revised FGR definition, including the introduction of an optional opt-out regime (afmeldregeling). In its consultation report, the legislator noted that many respondents advocated replacing the proposed opt-out regime with an opt-in regime (aanmeldregeling), under which transparency would be the default, and FGR status would apply only upon election. The merits of both approaches are currently being considered, and a legislative proposal is expected in Q1 2027.

Grandfathering rules are available for Dutch and foreign (limited) partnerships that would be (re)classified as a non-transparent FGR as of 1 January 2025 or upon their later establishment.

These grandfathering rules apply until the new FGR definition enters into force, which is not expected before 1 January 2028.

Additional anti-dividend stripping measures

On 16 April 2026, the Dutch Ministry of Finance launched an internet consultation on additional measures to combat dividend stripping. The consultation, which closed on 28 May 2026, aims to address both fraudulent practices and undesirable tax planning where Dutch dividend withholding tax is reclaimed by parties without economic exposure to the dividend.

Building on the anti-dividend stripping measures that entered into force on 1 January 2024, the consultation sets out four alternative measures. Two of these are generic approaches: the net return test and an economic risk test inspired by German and Austrian rules. The other two are targeted measures aimed at pension funds and group structures in which dividend-stripping elements are spread across affiliated entities.

Following the consultation, the Dutch government is assessing the responses received and will determine which, if any, of the proposed measures should be developed into legislative proposals.

Parliamentary process

The Tax Plans 2027 are being presented by a government that does not hold a parliamentary majority in either the House of Representatives or the Senate. As a result, the adoption of the tax proposals will depend on securing sufficient support from other parties in Parliament. This may lead to further discussions, amendments, or delays as the proposals progress through the legislative process. Consequently, while the Tax Plans 2027 provide an indication of the government's policy intentions, the legislative outcome remains subject to parliamentary deliberation and approval.

We will keep you updated on relevant developments during the legislative process.