On Budget Day, 15 September 2026, the Dutch Government presented its 2027 Budget Plan, including several proposed changes that may affect employers, employees and payroll administration from 2027 onwards. Some proposals, including the tax incentives for start-ups and scale-ups and the 12% pseudo-final levy on fossil-fuel company cars, have been introduced previously but have now become more concrete. Other measures from previous Budget Plans have already been approved and will become relevant in 2027, including the increase of the WKR discretionary levy-free margin to 2.16% of taxable collective wages up to €400,000 and changes to the expat ruling.
The proposals still need to be approved by Parliament and may therefore be changed, amended or supplemented during the legislative process, which is expected to be completed in December 2026. Below, we highlight the main proposed changes relevant to employers and payroll administration.
What is changing from 2027?
The tax-free travel allowance is proposed to increase
The maximum tax-free travel allowance is proposed to increase from €0.23 to €0.25 per kilometre, with retroactive effect from 1 January 2026.
This increase was already approved by the Government earlier this year.
Employers should therefore consider how the increased allowance is reflected in their payroll administration and whether any adjustments are required for payments made during 2026.
The 12% levy on fossil-fuel company cars will apply from 2027
The 12% pseudo-final levy on fossil-fuel passenger cars made available for private use, including commuting, will apply from 1 January 2027.
The 2027 Budget Plan proposes changes to the transitional rules for cars already made available before 1 January 2027. The proposed package would extend these transitional rules until 31 December 2030. Certain temporary replacement cars and driving-school cars are excluded.
An anti-cumulation provision is also proposed to prevent overlap with the final levy on excessive severance payments.
Employers with fossil-fuel company cars should review their existing arrangements and identify which vehicles may fall within the levy and whether the proposed transitional rules apply.
The youngtimer scheme will be phased out more gradually
Under the youngtimer scheme, private use of a company car is taxed at 35% of the car’s current market value rather than its original list price.
Following an earlier proposal to raise the age threshold to 25 years in 2027, the Government now proposes a more gradual phase-out. The threshold would increase from 16 to 17 years in 2027 and to 20 years from 2028.
Employers and employees currently using the youngtimer scheme should review how these proposed changes may affect the tax treatment of the relevant company cars from 2027.
The company products exemption will be abolished
The targeted exemption for employee discounts on company products is proposed to be abolished from 1 January 2027.
Employers may continue to provide these benefits by allocating them to the discretionary levy-free margin under the work-related costs scheme (WKR), subject to the applicable conditions.
Employers providing discounts on company products should therefore review how these benefits are currently treated and consider whether any changes to payroll or WKR administration will be required.
The first-day notification will be abolished
The statutory possibility for the Dutch Tax Authorities to require employers to submit first-day notifications (eerstedagsmelding) is proposed to be abolished from 1 January 2027.
The pensionable income cap is proposed to be frozen
The maximum pensionable income for tax-favoured second- and third-pillar pension accrual, which is €137,800 in 2026, is proposed to remain unchanged from 2027 through 2032.
Employers should consider the potential impact on pension arrangements, particularly for employees whose income is at or above the current pensionable income cap.
Tax incentives for start-ups and scale-ups
A proposed new regime for employee stock options in qualifying start-ups and scale-ups would allow, subject to conditions, only 65% of the relevant benefit to be treated as taxable wages. Taxation could also be deferred until the shares are sold.
The proposal has been broadened compared with the April 2026 consultation draft, including to certain international group companies and qualifying parent companies. It also introduces rules for cross-border situations, including a step-up on immigration and a precautionary assessment on emigration.
A two-year holding restriction is proposed, subject to exceptions such as a prior IPO.
The 65% taxable base would apply only to the share value appreciation exceeding the fair market value at the time of grant.
The new regime does not apply to employees with a lucrative interest or substantial interest, meaning an interest of 5% or more.
For employers using employee stock options as part of their remuneration arrangements, particularly international employers, the proposed changes may have implications for payroll and the tax treatment of employees in cross-border situations.
What does this mean for employers?
The impact of the proposed changes will depend on the individual employer, its workforce and the way employee remuneration and benefits are administered through payroll.
Employers should review, where relevant:
- Travel allowances and the proposed increase to €0.25 per kilometre
- Company cars that may be affected by the 12% pseudo-final levy
- Employees currently benefiting from the youngtimer scheme
- Employee discounts on company products and their treatment under the WKR
- Payroll administration relating to first-day notifications
- Pension arrangements where employees are affected by the pensionable income cap
- Employee stock option arrangements, particularly where international or cross-border elements apply
It is also important to distinguish between the proposals included in the 2027 Budget Plan and measures that have already been approved and will take effect in 2027.
These previously adopted measures include the increase of the WKR discretionary levy-free margin to 2.16% of taxable collective wages up to €400,000, as well as changes to the expat ruling. From 2027, the maximum tax-free allowance will reduce from 30% to 27% and the applicable salary threshold will increase, subject to the relevant transitional and grandfathering provisions.
How can LIMES help?
At LIMES, we recommend reviewing the proposed changes ahead of 2027, particularly where they may affect employee remuneration, benefits or payroll administration.
Our international tax and payroll specialists can help employers assess the impact of the proposed changes on their employees and identify where payroll processes or employee arrangements may need to be reviewed.
We can also support employers with company car arrangements, WKR treatment, pensionable income and employee stock option arrangements, including where cross-border considerations apply.
Contact our LIMES international experts for support reviewing the proposed changes under the 2027 Dutch Budget Plan and their potential impact on your employees and payroll.
