Budget Day 2026: measures for employees and employers
On Budget Day 2026, the plans for the coming year were announced. We have listed the most important tax measures that are relevant to you as an employer or employee. What changes for you?
- Increase tax-free threshold for reimbursement of travel allowance: The maximum tax-free travel allowance will be increased from € 0.23 to € 0.25 per kilometre on a permanent basis, with retroactive effect from 1 January 2026. This allowance qualifies as a targeted exemption for travel incurred in the course of employment, including commuting between home and the regular place of work. The increase had already been introduced through an administrative decree, and it is now being included in legislation. For income tax purposes, the fixed deductible amount for travel expenses will also be increased to € 0.25 per kilometre. The expansion of the regime does not automatically result in higher reimbursements or allowances for employees. Employers must be willing to grant increased compensation.
- Abolition of work–related costs scheme exemption for employer-own products: The targeted exemption for employer-own products will be abolished. Employer-own products may currently be provided or reimbursed free of tax up to an amount equal to 20 per cent of their fair market value, subject to a maximum of € 500 per employee per calendar year. Following the abolition, such benefits will generally qualify as taxable employment income. Employers may, however, allocate these reimbursements and benefits to the discretionary allowance under the work-related costs scheme (werkkostenregeling). To the extent sufficient discretionary allowance is available; these benefits may still be provided tax-free. Where the discretionary allowance is exceeded, the employer will be liable to a final levy of 80 per cent on the excess amount.
- Share options for employees of start-ups and scale-ups: A tax-favoured regime is being introduced in the wage tax system for employees who receive share options from a qualifying startup or scale-up. The regime offers two key benefits:
- Taxation upon sale of the shares: As a general rule, taxation will no longer take place when the shares become tradable. Instead, based on the new regulation for start-ups and scale-ups, taxation will be deferred until the employee sells the shares acquired through the exercise of the share options. This prevents employees from having to pay tax at a time when they may not yet have sufficient means to do so. In addition, employees may, as is the case for regular stock options, opt for an earlier taxable event, namely at the time the stock options are exercised or become tradable.
- Lower effective tax burden: The taxable benefit is determined as the sale proceeds of the shares less the exercise price paid by the employee for the relevant share options. This reduction cannot result in a negative taxable benefit. With this new regulation for start-ups and scale-ups, only 65 per cent of this benefit is subject to wage tax, rather than 100 per cent. However, if the exercise price at the time the options were granted was lower than the fair market value of the underlying shares, this reduction does not apply to that part of the benefit. In other words, any benefit that already existed at the time the share options were granted remains fully taxable.
The regime applies exclusively to unlisted companies that have been qualified as a startup or scale-up by the Netherlands Enterprise Agency (RVO). In making this assessment, factors such as innovation, growth potential, and a scalable and repeatable business model are considered. An additional key condition is that, in principle, the shares or options may not be disposed of within two years of the grant date. Furthermore, employers are required to maintain records of granted options, acquired shares, and relevant transactions.
Special provisions also apply in the context of immigration (step-up) and emigration (exit tax/conserving assessment). In addition, specific rules apply where the employer no longer qualifies as a startup or scale-up, where the conditions of the regime are no longer met, or where the employee passes away.
- Amendments pseudo-final levy fossil fuel company vehicles: In 2026, a new final levy on employers for fossil fuel company cars was introduced. Under this measure, from 2027 employers will be liable to a tax of 12 per cent of the listed price if a fossil fuel company car is made available to an employee who may also use the car for private purposes (including commuting). This tax is borne by the employer, and it is additional to the regular fringe benefit charge imposed on the employee. The 2027 Tax Plan contains several additional amendments and clarifications regarding this new final levy.
- Extension of the transitional period: The transitional period for the pseudo- final levy will be extended from 17 September 2030 to 1 January 2031. If a vehicle was already made available prior to 2027, the transitional rules may apply, because the pseudo-final levy will only become due from 1 January 2031.
- Exemption for replacement vehicles and driving school vehicles: In cases where a replacement vehicle is provided because the regular vehicle is undergoing maintenance or repairs, the pseudo-final levy will not apply during the first 14 days. If the replacement vehicle is used for a longer period, the pseudo-final levy will become due from day 15 onwards. The pseudo-final levy does not apply to driving school vehicles equipped with a manual transmission.
- Exemption for incidental use of a vehicle: An exemption is introduced for incidental use of a vehicle. Until 31 December 2030, the pseudo-final levy will not apply if a vehicle is made available to an employee for private use for a maximum period of seven days per calendar year. This measure is particularly relevant in situations where, for example, a rented fossil-fuelled vehicle is used temporarily, and the transitional rules are unavailable. If the seven-day period is exceeded, or if the vehicle is made available during a second period within the same calendar year, the pseudo-final levy will apply.
- Introduction of an anti-cumulation provision: An anti-cumulation provision will be introduced to prevent employers from being subject to two pseudo-final levies in certain situations. Where both the pseudo-final levy for fossil fuel company cars and the existing pseudo-final levy on excessive severance payments would otherwise apply, the company car benefit is not included in the taxable base for the latter pseudo-final levy.
- Introduction transitional rules for the tightening of the youngtimer regime: The youngtimer regime was tightened under the 2026 Tax Plan. Accordingly, the age threshold was increased from 15 to 16 years as of 1 January 2026 and will be further increased to 25 years as of 1 January 2027. A previously approved transitional arrangement will be codified into legislation. As a result, vehicles that became 15-years-old in 2025 and were already made available in 2025 may continue to qualify for the youngtimer regime until 1 January 2027. In addition, an unintended difference in the tax treatment (valuation basis) of 15-year-old and 16-year-old vehicles will be corrected.
- Freeze pension accrual cap: Since 1 January 2015, a fiscal cap was applied to the amount of income on which pension benefits may be accrued under a second-pillar pension scheme and on which tax-facilitated annuity benefits may be accrued under a third-pillar arrangement. This cap (the pensionable salary cap) is indexed annually and for 2026 is €137,800. It is proposed that the annual indexation of the pensionable salary cap be suspended for the period from 2027 to 2032. As a result, the cap will remain unchanged during these years and will no longer increase in line with wage increases.
Want to know more?
