2027 Tax Plan: what do the latest tax developments mean for private equity and M&A?

No changes have been announced to the Dutch corporate income tax rates and withholding tax rates for 2027. 

2027 tax rates: 

• Corporate income tax: 
  • 19% up to and including € 200,000, 
  • 25.8% on the excess 
• Dividend withholding tax: 15%  
• Conditional withholding tax on dividends, interest and royalties: 25.8% 

It will become more attractive for start-ups and scale-ups to reward employees with share options. Employees will no longer have to pay tax immediately when they exercise their options, but only when they sell the shares. This prevents them from having to pay tax on these share options whilst they have not yet received any proceeds in cash. 

Start-ups and scale-ups often do not have the financial resources to offer a competitive salary. A share option plan is an attractive alternative form of remuneration to attract and retain talented employees. Under the legislative proposal, income from share option plans will, subject to conditions, be taken into account for the employee as “taxable wages” for only 65%. As a result of this narrowing of the tax base, the highest wage tax rate of 49.5% is reduced to approximately 32%. 

The legislative proposal aims to bring the Dutch taxation of share options in start-ups and scale-ups more in line with international standards. 

Dutch corporate income tax includes rollover facilities for mergers and demergers. Under these facilities, immediate corporate income tax taxation upon a merger or demerger is avoided (as far as possible) and the tax claim is transferred to the acquiring party or parties. Currently, a condition is that the merger or demerger is not predominantly aimed at avoiding or deferring taxation (the anti-abuse provision). If certain shares are transferred to a genuine third party within three years of the business merger or demerger, business motives are presumed to be absent (the presumption of non-business motives). It is then up to the taxpayer to provide evidence to the contrary. If the taxpayer fails to do so, ‘abuse’ is deemed to be present. 

In early 2026, the Dutch Supreme Court ruled that the presumption of non-business motives in case of such a transfer within three years is in conflict with the EU Merger Directive. The Dutch government therefore proposes to abolish this specific presumption in the anti-abuse provision as of 1 January 2027. For the avoidance of doubt, the anti-abuse provision itself remains in place. At the same time, the option for taxpayers to obtain advance certainty that there is no ‘abuse’, despite an intended transfer of shares within the meaning of the presumption, will also disappear. 

Under the participation exemption, benefits (dividends and capital gains) derived from a qualifying participation are exempt. A qualifying participation requires, for example, an interest of at least 5% in a subsidiary. 

A benefit arising from the currency risk incurred in respect of the investment in a participation is likewise exempt for Dutch corporate income tax purposes under the participation exemption. In practice, this currency risk is sometimes hedged, for instance by means of a loan or a forward exchange contract. The currency results realised on a hedging instrument may, upon request and subject to conditions, also fall under the participation exemption. A positive currency result on the hedging instrument is then exempt and a negative result on the hedging instrument is then not deductible. The Dutch government proposes to amend the tax treatment of currency results on hedging instruments under the participation exemption as follows. For financial years commencing on or after 1 January 2027, only the ‘unpriced’ currency result of a legal act intended to hedge a currency  incurred in respect of a qualifying shareholding may be brought under the participation exemption. 

This means that the ‘priced-in’ currency result on such hedging instruments will by definition be taxable going forward. The priced-in currency result is determined when the legal act is entered into and relates to the relative weakness or strength of the respective  currency compared to the currency in which the taxpayer calculates its taxable profit (usually the euro). The unpriced currency result is the difference between the expected exchange rate movement at the time the hedging instrument is entered into (the priced-in currency result) and the actual exchange rate movement upon subsequent settlement of the hedging instrument. Alongside this substantive amendment, the government proposes to supplement and clarify the application of the participation exemption to hedging instruments on several points. 

Transitional rules are proposed for existing hedging instruments. As a result, any priced-in benefit attributable to the period before the first financial year starting on or after 1 January 2027 remains exempt under the participation exemption, even if that benefit only has to be recognised after that period under the tax rules. At the same time, another transitional measure blocks  anticipatory behaviour by taxpayers. 

The innovation box is an optional regime in Dutch corporate income tax under which income from self-developed intangible assets can effectively be taxed at a reduced rate. Determining the amount of that income can result in a significant administrative burden. To address this, Dutch taxpayers are given the option to determine the income falling within the innovation box on a lump-sum basis. In that case, the income is set at 25% of the profit, capped at € 25,000. The cap applies per year and per taxpayer. The lump-sum regime may be applied for a period of three years per intangible asset. The government proposes to increase this maximum lump-sum amount in the innovation box to € 100,000 as of 1 January 2027. 

The Minimum Tax Act 2024 (Safe Harbour Rules) Bill implements the internationally agreed ‘Side-by-Side package’ in the Dutch Minimum Tax Act 2024 (Pillar Two), which applies to multinational groups and large-scale domestic groups with consolidated revenue of at least EUR 750 million. The bill codifies four safe harbour rules and extends an existing arrangement. 

For a detailed overview we refer to 2027 Dutch tax Budget-summary for Multinationals (2027 Dutch Tax Budget – Summary for Multinationals - BDO). 

This measure increases the targeted exemption for travel expenses from € 0.23 to € 0.25 per km, with retroactive effect to 1 January 2026. The government calls on employers to actually use this fiscal scope so that the benefit reaches employees. 

On 11 September 2026, the Dutch Supreme Court clarified the corporate income tax provision aimed at preventing ‘trading in loss companies’. Under the main rule of this anti-abuse provision, tax losses can no longer be set off against future profits if the ultimate interest in the taxpayer changes by at least 30%. In the case of a corporate entity, such as an NV or BV, this concerns a shareholder change of 30% or more. Several exceptions apply to this main rule. For example, losses may, subject to conditions, remain available for carry-forward if various tests are met. 

It was already clear that this limitation on loss set-off applies in any event to actually incurred and realised tax losses. With this Supreme Court judgment, it is now clear that the limitation also applies to latent losses that have not yet been ‘realised’ and only become visible after the shareholder change. In this case, the latent losses related to real estate, but the Supreme Court’s decision appears to apply to all assets and other items that could result in latent tax losses. 

In short: a loss may also fall within the limitation if it only materialises after the shareholder change. If the cause of the loss already existed before the shareholder change, that loss may not be used to reduce profits of later years where those profits accrue to the benefit of the new shareholders. 

For transaction practice, this means that latent losses that already exist before closing, but only become visible for tax purposes afterwards, may affect the value of the target and the expected use of those losses. During a tax due diligence exercise, it is therefore important to review not only tax returns and determined losses, but also, for example, impairments, provisions, loss-making contracts or assets whose value had already declined before closing. Such items may mean that expected post-closing tax benefits are more limited than anticipated. 

Article 10a of the Dutch Corporate Income Tax Act 1969 limits the deduction of interest on loans from related entities that are used, for example, to finance acquisitions. The deduction of interest may be denied if the loan and the chosen structure appear to be primarily tax-driven. The limitation does not apply if the taxpayer can demonstrate that there were sound commercial reasons for both the acquisition and the way in which it was financed. Deduction may also still be possible if the interest is sufficiently taxed at the level of the recipient. These are also referred to as rebuttal rules. 

The judgment of the Amsterdam Court of Appeal of 20 August 2026 appears to raise the bar for successfully providing rebuttal evidence: not only the acquisition itself, but also the manner of financing must be predominantly driven by business motives. Not only must the acquisition be business-driven, but the specific debt push-down and allocation of the debt to the Netherlands must independently be supported by predominantly business motives. External acquisition financing alone does not provide for a sufficient substantiation in this respect. 

In this specific case, Dutch participations were transferred internally to a Dutch acquisition holding company after a UK group company had initially made the external acquisition and obtained the external financing. 

The following can be derived from this judgment:

• To demonstrate parallelism between the external loan and the internal loan, proper documentation and flow of the funds obtained are essential. The Court of Appeal examined the actual cash flows, noting that the external bank loan had been drawn at UK level for the acquisition of the entire international group. Since these funds were largely paid directly to the seller by the UK group company and it had not been made plausible that the funds were actually on-lent to the Dutch holding company, the Court held that the banks could not be regarded as the actual lenders to the Dutch holding company. According to the Court, parallelism requires not only comparable terms, but also a causal link between the external and internal loan. 
• The Court determined that the burden of proof is shifted to the taxpayer as the respective “box” in het corporate income tax return on the application of the base erosion rules was not checked. 
• In addition, the Court of Appeal did not only look at the loan agreements to assess parallelism, but also at what happened in practice: the actual implementation. Because there were differences in repayments, uncertainty about the term of the loans, the interest on the internal loans was not actually paid while interest on the bank loan was paid, and there were differences between the contractual and reported interest, the Court considered that parallelism had not been made plausible. 
• It is important that non-tax motives are predominant for an internal transfer and internal financing. These motives must also be capable of being substantiated by providing documents evidencing them, such as transaction documentation and/or minutes of meetings. In this context, it also seems relevant to be able to demonstrate that these motives played a role at the time the structure was set up. 

It was previously announced that the increased taxation of indirectly held lucrative interests (carried interest/sweet equity) will be postponed until 1 January 2028. 

Income from lucrative interests, such as dividends and capital gains, is generally taxed in Box 1 of the Dutch personal income tax regime at progressive rates of up to 49.5% in 2026, because such interests are often regarded as part of employment income. 

If the lucrative interest is held through a personal holding company and certain conditions are met, taxation shifts to Box 2 (substantial interest taxation) at a maximum rate of 31% in 2026. However, recent legislative developments are aimed at increasing the total tax rate on benefits from indirectly held lucrative interests through a holding company. 

The 2026 Tax Plan had already proposed increasing the rate to a maximum of 36%, aligning it with the rate in Box 3 (income from savings and investments). The entry into force of this measure has been postponed until 1 January 2028.