Executive summary

The Dutch government published its 2027 fiscal budget proposals on 15 September 2026 (Tax Plans). Overall, the proposed measures are largely consistent with previously announced policy intentions and introduce only limited changes for multinational groups, reflecting the Dutch government's commitment to maintaining a stable and predictable fiscal environment. Corporate income tax rates, withholding tax rates and various competitive elements of the Dutch tax system remain unchanged. The proposals include several targeted measures that benefit certain businesses.

For multinational groups, the key proposals include (1) the (retroactive) adoption of the Minimum Tax (Pillar Two) Side-by-Side guidance announced by the Organisation for Economic Co-operation and Development (OECD) earlier this year (the Side-by-Side Package), and (2) measures aimed at further strengthening the innovation climate in the Netherlands. The proposals set out in the Tax Plans remain subject to parliamentary approval, with final legislation expected to be enacted in December 2026.

Key proposals

Minimum Tax (Pillar Two)

Effective date: Retroactive application for the key measures of the Side-by-Side Package for reporting years commencing on or after 1 January 2026

The Tax Plans include draft legislation implementing the Pillar Two Side-by-Side Package. Most notably, this contains the Side-by-Side Safe Harbor for multinational groups with an Ultimate Parent Entity located in a qualifying jurisdiction (such as the United States) with retroactive effect for reporting years commencing on or after 1 January 2026. As a result, qualifying groups would generally be exempt from the application of the Income Inclusion Rule and Undertaxed Profits Rule for reporting years commencing on or after 1 January 2026.

Other measures in the Side-by-Side Package that are proposed to be implemented include the Ultimate Parent Entity Safe Harbor, the Simplified Effective Tax Rate Safe Harbor and the Substance Based Tax Incentives Safe Harbor. In addition, the Transitional Country-by-Country Safe Harbor would be extended by one year, and the proposals introduce further administrative guidance and clarifications.

Measures strengthening the innovation climate

Effective date: 1 January 2027

To further strengthen innovation and sustainable investment, the Tax Plans propose increasing the Energy Investment Deduction from 40% to 45.5% of the qualifying investment amount. The Tax Plans also include certain administrative clarifications regarding the interaction between the taxpayers to claim an additional deduction from their taxable profit with respect to investments in energy-efficient assets.

The Tax Plans also include measures aimed at enhancing the accessibility of the Dutch innovation box regime for smaller innovative businesses. The proposal would allow a broader group of businesses to benefit from the innovation box (Dutch patent box regime) without additional compliance obligations. Under the proposal, the benefit threshold for the application of the simplified innovation box regime will be increased from €25,000 to €100,000, allowing more businesses to qualify for the simplified regime. In addition, certain administrative requirements and compliance obligations relating to the innovation box regime are intended to be abolished, reducing the associated administrative burden for taxpayers.

Lastly, the Dutch government proposes a new tax incentive regime to encourage employee participation in start-ups and scale-ups. Recognizing that innovative growth companies often face challenges in offering market-competitive remuneration packages, the Tax Plans aim to enhance the attractiveness of equity-based compensation arrangements for qualifying start-ups and scale-ups that have obtained a formal decision from the Ministry of Economic Affairs and Climate. The proposed regime consists of two key measures:

1. Reduced taxation of share option income: Only 65% of the benefit derived by the employee relating to share options will be subject to wage tax.
2. Deferral of taxation: Wage tax and personal income tax on shares acquired through the exercise of employee stock options would no longer become due upon exercise. Instead, taxation will be deferred until the shares are disposed of, thereby improving liquidity for employees, unless the employee elects for taxation upon exercise or when the shares become tradeable. For purposes of these rules, termination of an employment agreement would not constitute a realization event.

Other proposals relevant to multinational groups

Hedging results and the participation exemption

Effective date: 1 January 2027 (with transitional rules for qualifying hedging instruments concluded before 15 September 2026)

Income, such as dividend, capital gain and foreign exchange (FX) results, derived from a qualifying participation is exempt from Dutch corporate income tax under the participation exemption regime. This exemption may also apply to results arising from arrangements to hedge FX risks associated with a qualifying participation.

In this context, the Tax Plans consider that a distinction needs to be made between priced-in FX results, which are foreseeable at the time the hedging instrument is entered into, and non-priced-in FX results. As per the proposal, only non-priced-in FX gains and losses in connection with instruments hedging the relevant FX risk will continue to be exempt under the participation exemption regime. Priced-in FX results embedded in the hedging instrument at inception will no longer qualify for the exemption and will therefore be included in the taxable result. The proposal aims to eliminate perceived mismatches whereby deductible hedging costs are offset by exempt FX gains. In addition, several technical and administrative aspects of the regime will be clarified and refined. Taxpayers using hedging instruments in this context may need to reassess the expected tax treatment of future hedging gains and losses, including any transitional rules.

Tax-neutral business restructuring facility

Effective date: 1 January 2027

The Tax Plans propose to remove the statutory presumption of abuse for tax-neutral business mergers and legal demergers triggered by a direct or indirect transfer of ownership of the transferor or transferee within three years after the restructuring. This proposal follows a recent Dutch Supreme Court ruling that found the presumption to be unjustified under European Union Law. This is generally expected to increase legal certainty for taxpayers undertaking such transactions as part of a broader corporate restructuring. (See EY Global Tax Alert, Dutch Supreme Court clarifies anti-abuse test for tax-neutral demergers, dated 27 February 2026). Furthermore, the government has reiterated its intention to further simplify the Dutch tax-neutral restructuring facilities, with additional legislative proposals expected in 2027.

Other updates

The Dutch government is continuing its review of the final design of the Box 3 regime applicable to savings and investment assets held by individuals, with further legislative proposals expected in the next six months. While the detailed framework for the future regime remains under consideration, the stated policy objective is to replace the current deemed-return approach with a system based on actual returns, either partially or fully. These developments are particularly relevant for individuals resident in the Netherlands, including expatriates.

Next steps

The proposals will now proceed through the parliamentary process, whereby the Dutch government will look for majority votes within Dutch Parliament, with the completion of the legislative process expected in December 2026. Taxpayers should assess the potential impact of the proposed measures and continue to monitor legislative developments as the proposals progress through Parliament. EY Netherlands will provide further updates as additional guidance and enacted legislation become available.